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