ABU DHABI MEGA PROJECTS: SYNOPSIS OF PRIORITY PROJECTS

UNCLAS SECTION 01 OF 04 ABU DHABI 000943

SENSITIVE
SIPDIS

STATE FOR NEA/ARP BMASILKO, NEA/PI, NEA/PPD, OES, EEB

E.O. 12958: N/A
TAGS: ECON EINV ETRD EIND SENV PGOV AE US
SUBJECT: ABU DHABI MEGA PROJECTS: SYNOPSIS OF PRIORITY PROJECTS

REF: A) Abu Dhabi 920, B) Dubai 272, C) Dubai 271, D) Abu Dhabi 791

ABU DHABI 00000943 001.2 OF 004


SUMMARY
--------------


1. (U) As Abu Dhabi Mega-Project development changes the landscape
of the UAE's capital city, this cable will describe some of the more
ambitious projects. These include: Yas Island ($40 billion
entertainment development will be home to the world's first Ferrari
theme park); Saadiyat Island cultural zone (to feature a Guggenheim
Museum, Louvre, Maritime Museum and National Museum, among other
upscale cultural and recreation offerings); Lulu Island (resort
within view of the Abu Dhabi Corniche [main waterfront area], with
visions of commercial, residential, cultural and recreational
facilities); Al Raha Beach (11 "districts" to house up to 120,000
residents and business enterprises); Cleveland Clinic (integrated
clinic-hospital design will serve local and international patients
with world-class medical care); and Masdar City (a proposed city of
50,000 residents that will be 100% environmentally friendly and
carbon neutral). While the Mega Projects described below are some
of the more prominent (and expensive) currently underway in Abu
Dhabi, they are only a sample of the Emirate's ambitions. Peaceful
nuclear power is also on the agenda. Other key structures and
extensive development plans will drastically change the landscape of
the city, keeping the construction crane (the UAE's "national bird"
to many) flying high for years to come. This is one of a series of
planned cables related to on-going project development in Abu Dhabi
(see ref A). End summary.

YAS ISLAND
--------------

--- Concept/Location: Residential and recreational "island" created
by dredging a canal to separate it from the mainland, a short drive
outside of Abu Dhabi in the direction of Dubai and very near Abu
Dhabi International Airport.
--- Estimated Cost: $40 billion
--- Estimated Labor Force: 35,000


2. (U) On August 3, ECONOFF visited the initial stages of Yas
Island on the outskirts of Abu Dhabi to tour the dusty grounds and
meet with planning officials. Yas Island occupies a total land area
of 2,500 hectares (approximately 6 km. by 7 km.),of which 1,700
hectares will be developed into attractions such as a world-class
motor sports racetrack (Formula 1),signature hotels, a
Ferrari-based theme park (a three-story indoor theme park conceived
as part of Abu Dhabi Mubadala's purchase of a 5% stake in Ferrari in
July 2005),a Warner Brothers theme park, an indoor sports stadium
(patterned after the Staples Center in Los Angeles),water parks, an
enormous shopping mall (connected to the Ferrari park),golf
courses, lagoon hotels, marinas, polo clubs, apartments, and
villas.


3. (SBU) Yas Island's construction is in the preliminary stages and
will open in phases over the next 5-7 years. According to Aldar
Marketing and Communications Manager, Said El-Khouri, Yas Island
will host a Formula 1 Race in November 2009 as its initial
attraction (and as a driving force behind ambitious construction
deadlines). (Note: Septel will offer background on Aldar and other
mega developers. End note.) Against the backdrop of a bustling
construction zone, El-Khouri said that when he started the job a few
months prior, "there was no research" conducted before construction
commenced to gauge the sustainability or the scope of the market
audience.


4. (SBU) Comment: While the plans for Yas Island are grand and
impressive, key questions remain, such as who will populate the
residences and patronize the attractions? A Formula 1 race will
certainly attract a crowd now and again, but research on the
customer base for multiple theme parks remains tentative.
Apparently no marketing data has been gathered to define the target
audience (although Aldar's presentation began with a world map
showing flight times from Europe and Asia to the "hub" of Abu
Dhabi). End comment.

AL RAHA BEACH
--------------

--- Concept/Location: Eleven precincts of luxury residential and
commercial real estate, gardens and amenities within a few minutes
of Abu Dhabi (across the bay from Yas Island and near the
International Airport).
--- Estimated Cost: $15 billion
--- Estimated Labor Force: 20,000


5. (U) Al Raha Beach, an approximately $14.7 billion project, is
set along Abu Dhabi's sheltered coastline on the mainland
thoroughfare to Dubai (in close proximity to Abu Dhabi airport) and
will feature eleven precincts. Each precinct will have unique

ABU DHABI 00000943 002.2 OF 004


features, variously including luxury residential apartments,
townhouses and villas, private boat moorings, retail high streets,
local supermarket and shops, waterside restaurants and cafes, public
beach with landscaped gardens, luxurious shared gardens and open
spaces. The headquarters of Aldar, which is developing the project,
will also be housed in a disc-shaped structure that is beginning to
take shape at one end of the development. There are long term plans
to have a Light Rail Transit (LRT) system for speedy transit
throughout the development, in addition to (as yet undefined) plans
to expand access by rail to both Abu Dhabi and Dubai. Al Raha
currently aims to have more than 120,000 residents.


6. (SBU) A recent group of visitors was told that Al Raha was
putting up construction cranes as fast as the Italian supplier could
produce them -- its building pace limited only by factors beyond its
control. When completed, Al Raha aims to house more than 120,000
residents. Some hope that such residential developments will
relieve pressure on the housing shortage in Abu Dhabi generally,
while others fear that the upscale nature of Al Raha and its sister
projects will offer little relief to the low and middle income
demographic that keeps the city running. For now, plans remain
upscale.

SAADIYAT ISLAND
--------------

--- Concept/Location: Cultural zone on newly developed island
within a kilometer or two of Abu Dhabi city center.
--- Estimated Cost: $30 billion
--- Estimated Labor Force: 20,000


7. (U) "Saadiyat" Island, which means "island of happiness", is one
of 200 islands located off the shore of Abu Dhabi which are to be
developed into an abundance of cultural and residential properties.
The $30 billion project will feature seven districts (Cultural,
South Beach, Saadiyat Beach, Wetland, Lagoon, Marina, and Eco-point)
and aims to be a cultural gathering place featuring a Guggenheim
Museum, a branch of the Louvre, a Maritime Museum, and the new
Sheikh Zayed National Museum. UAE President Khalifa bin Zayed
al-Nahyan has persuaded Frank Gehry to design the latest and, at
450,000 square feet, the biggest branch of the Guggenheim. French
architect Jean Nouvel is behind the first offshoot of the Louvre
outside of Paris. Beyond museums and performing arts facilities,
there will be villas, condos and apartments, golf courses, 29 hotels
with various leisure and entertainment offerings.


8. (U) Targeting more than 170,000 residents and an upgraded
transportation infrastructure (two bridges and a tunnel to connect
the island to the mainland),Saadiyat's design aims to restore
mangrove and beachfront eco-systems, mandate energy-efficient levels
of residential density (lower density being the environmentally
friendly target footprint),introduce mass-transport systems,
integrate into the cultural offerings a wide range of community and
education facilities, and provide housing for a broad range of
income groups. The overall development of the island will be phased
over 15 years, with the first phases becoming operational by 2012.
The island is 2,700 hectares in size, with approximately 1,000 zoned
for development at an estimated cost of just under $30 billion.
News reports estimate that it will take 20,000 laborers to complete
the project.


9. (SBU) A mock-up of the Saadiyat plan, with detailed
architectural renderings of key museums and how they fit into the
overall island development, has been on display in a specially
designed portion of the 7-star Emirates Palace Hotel main floor for
more than a year. Even the mock-up has been a tourist draw (as if
the Emirates Palace itself and the rotating exhibits next door --
most recently a 200-piece Picasso retrospective -- were not enough
to captivate visitors). The Crown Prince of Abu Dhabi has enjoyed
showing this display to prominent international visitors as evidence
of the development aspirations of Abu Dhabi, linking his own
credibility to the success of the project.

LULU ISLAND
--------------

--- Concept/Location: Tourist holiday resort area within view of
the Abu Dhabi Corniche, with plans to further develop the Island to
include a mix of commercial and residential projects.
--- Estimated Cost: $11 Billion


10. (U) The largely manmade Lulu Island is spread over 1050 acres
(425 hectares) just off the coast of Abu Dhabi's main downtown
waterfront. Given its proximity to the Corniche, tourists can
easily hire a boat to cross the bay and relax on a quiet beach on
the sandy island. By some accounts Lulu is one of the more famous
islands in the region, possibly because of ambitious expectations
when work began in early 1988 to transform it into a comfortable
holiday resort protected on the sea-ward side by a breakwater.

ABU DHABI 00000943 003.2 OF 004


Early rumors of a Disneyland style park never came to fruition, and
the island still sits calmly in the bay. The island is reportedly
to be developed as a mixed commercial and residential project, with
plans for hotels and restaurants to complement the resort
atmosphere, although few signs of construction are obvious. Lulu
Island has several beaches and could be a focal point for water
sports; officials hope it might attract more tourism to Abu Dhabi
(in competition with Dubai). Lulu Island is, for now, a quiet
sandbar with big expectations.

CLEVELAND CLINIC
--------------

--- Concept: Integrated clinic-hospital to serve local and
international patients in an environment that combines excellent
amenities with world-class medical care.
--- Estimated Cost: Undisclosed


11. (U) The Abu Dhabi branch of the Cleveland Clinic aims to be a
landmark structure in a new financial district to be built on Al
Sowa Island, one of the city's many nearby islands. In
architectural renderings, the 360-bed, 2.5 million square foot
facility looks like a collection of interlocking glass rectangles
stacked atop one another. The hospital will include
state-of-the-art environmental features such as double-skinned glass
facades designed to conserve energy while flooding the interior with
daylight. Scheduled to be operational in 2011, it will include a
multi-specialty tertiary center and adjacent clinic. The integrated
clinic-hospital design will serve local and international patients
in an environment that combines excellent amenities (at the VIP
level which the Emirati public has come to expect) with world-class
medical care.


12. (U) The Ohio-based Cleveland Clinic -- a not-for-profit,
multi-specialty academic medical center that integrates clinical and
hospital care with research and education -- has a 15-year operating
agreement with Mubadala, an Abu Dhabi government investment arm
chaired by Sheik Mohammed bin Zayed Al Nahyan, Crown Prince of the
emirate. (Note: Mubadala Development Company is a public joint
stock company focused on developing and managing an extensive and
economically diverse portfolio of commercial, infrastructural and
educational initiatives for the Emirate of Abu Dhabi. Septel will
report more on Mubadala's mission. End note.) The Cleveland Clinic
already has experience in delivering health care in Abu Dhabi, as a
team of its personnel has administered Abu Dhabi's premier hospital,
the Sheikh Khalifa Medical City, for over a year.

MASDAR CITY
--------------

--- Concept/Location: A 100% environmentally friendly and carbon
neutral city and research facility between Abu Dhabi and the
International Airport.
--- Estimated Cost: $22 Billion


13. (SBU) Masdar ("the source" in Arabic) envisions a 6 square
kilometer city that will be the world's first zero-pollution,
zero-waste community capable of housing 50,000 to 100,000 people.
Purportedly scheduled to start limited operations by 2009,
construction of the full project is expected to be completed by

2015. No traditional gasoline fueled cars will be allowed in the
city; transit, desalination, and waste management systems will be
non-polluting; and water-saving technologies should reduce water
consumption by 80 percent. Beyond its role as a model environmental
zone, Masdar City hopes to host some of the best academics from the
around the world to research alternative energies and
environmentally safe development. As with other projects described
in this message, it has the strong backing of (and was, by Masdar's
account, conceived by) the Crown Prince of Abu Dhabi Mohammed bin
Zayed. (Note: A more in-depth report on Masdar will be provided
septel. End note.)

NUCLEAR POWER PROJECT
--------------

--- Concept: To develop peaceful nuclear energy to satisfy rising
electricity demand as the UAE economy booms.
--- Estimated Cost: Approximately $79 billion, including nuclear
reactors


14. (SBU) All of this development is meaningless without reliable
utilities -- electricity and water chief among them. The UAE is the
world's fifth-largest oil exporter (it has the fifth largest proven
reserves) and Abu Dhabi has recently undertaken a plan to develop
nuclear energy to satisfy rising electricity demand as its economy
booms on record oil export revenues. A no-holds-barred construction
boom is seriously straining the power supply. Limited generation
capacity, low feedstock supplies (such as natural gas) to augment
that capacity, and an inadequate national grid, have the nation on

ABU DHABI 00000943 004.2 OF 004


the verge of an "energy" crisis even as the world may assume it is
swimming in oil.


15. (SBU) The UAE's current oil reserves should last for a century,
but non-oil energy demand is expected to double by 2015 and the
population of the Arabian Peninsula could double by 2050. Abu Dhabi
sees nuclear energy as a solution. Currently, the Emirates Nuclear
Energy Corporation (ENEC, initiated and administered by the Emirate
of Abu Dhabi) is inviting pre-qualified firms to bid on a contract
to manage the country's emerging nuclear power program. Abu Dhabi
seeks to establish a nuclear regulatory authority and, according to
press reports, is planning to build up to 14 nuclear power plants at
a cost of $79 billion in a bid to satisfy growing demand for
electricity. (See ref D for more background on the nuclear
program.)

AND ETC.
--------------


16. (SBU) As if the sampling above were not ambitious enough for a
resident population base of 4-5 million (approximately 900,000
being UAE citizens),the longer list of Abu Dhabi projects
includes:

--- Khalifa City, a master-planned metropolis on the mainland that
in another 20 years may replace the island of Abu Dhabi as the new
capital;
--- Reem Island, a new centerpiece of urban development between the
current downtown area and Saadiyat Island;
--- Sheikh Zayed Mosque, an enormous structure near the bridges to
Abu Dhabi which at $2 billion, under construction since 1992, is
nearly completed, having opened for prayers and visitors in fall
2007; it boasts the world's largest hand-made carpet (from Iran) and
largest chandelier (from Germany),and Italian white marble
throughout;
--- Expansion of the Abu Dhabi International Airport in conjunction
with the growth of Itihad Airways;
--- Taweelah Port, eventually to replace Abu Dhabi's Port Zayed, in
a less congested location some distance from the city;
--- A replacement for the "traditional" market torn down in 2006
which developers promise will recreate the old ambience (while
architectural drawings show three very tall modern buildings rising
out of it);
--- Al Qurm Resort along one side of the narrower part of Abu Dhabi
island, with upscale residential properties on the opposite shore
(highways on both sides featuring construction walls to block views
of the construction);
--- a new "Khalidiya Palace" hotel, residence and office complex
rising high just across the street from the Emirates Palace;
--- upscale nature preserves both along the coast (towards Qatar)
and inland (near Al Ain);
--- talk of a broad program of urban renewal in the Emirate's
"second city" of Al Ain (on the border with Oman);
--- and the bridges, highways, and infrastructure to support (in
theory) all of the above.

This list is by no means exhaustive. Construction has become a way
of life in Abu Dhabi, as has long been the case in Dubai. Like
Dubai, it is clear that Abu Dhabi envisions much more than a modern
home for its citizens -- it seeks to attract the outside world's
notice and to entice foreigners to visit.


17. (SBU) Comment: With the boom in construction and
infrastructure development in Abu Dhabi, there have also emerged a
number of new, and rapidly profitable, developers. In a subsequent
cable, post will look at the powerful developers and (largely
government-affiliated) financiers behind some of these projects.
Many are believed to operate under the personal guidance of Abu
Dhabi Crown Prince Mohammed bin Zayed. End comment.
QUINN