A new public-private partnership model boosting real estate development in Al Gharbia

With Al Gharbia’s population having tripled in the last decade and expected to double its 2010 levels by 2030, the need for accommodation as well as office and residential facilities for new residents has prompted a flurry of real estate development.

Property developments approved by the Abu Dhabi Urban Planning Council in the region in 2014 include the Al Hai Al Tejari mixed-use development in Ghayathi, which will include residential, office and retail units as well as a cinema; the first phase of the Al Wajeha Al Bahria project in Mirfa, which will consist of four buildings offering a combined 27,000 sq metres of residential and retail space including 126 apartments; and the 60-villa Bida Al Mutawa community, west of Al Ghayathi, which is reserved for Emirati citizens.

In the first quarter of 2015, the council also approved the 73-villa Shams residential development in Madinat Zayed, while the second quarter of the year saw it give the go-ahead for a 186-unit mixed-use commercial and residential development in Mirfa. Three further developments were approved in the third quarter of the year, including a mixed-use commercial and residential building in Madinat Zayed comprising 112 apartments.

Partnership

A new model of public-private partnership in real estate development put together by the Department of Economic Development (ADDED) is set to bolster construction in the region.

Under this model, the authorities launch a competition for the development of government-owned land under a long lease and provide a variety of types of support to the successful developer, including administrative help, market research, and marketing and promotion activities, as well as sometimes leasing space within the development (for example in the form of office space or accommodation for government employees). The ADDED also takes a share of the project’s revenues.

The first project to be developed under the model is Al Wajeha Al Bahria in Mirfa. Most of the first phase, which is being developed by the National Transport and Contracting Company, is to be rented by the Abu Dhabi Water and Electricity Authority as staff accommodation for employees of the Mirfa independent power project, due to come on-stream in 2016. Phase two, which is due to be completed at the end of 2016, will be primarily devoted to employees of Etihad Rail. The Abela supermarket chain is leasing the ground floor of the development, with plans to bring in cafés and restaurants as well as its own retail outlet.

Mohammed Ibrahim Al Hosani, director at the ADDED, told OBG that the department was seeking to replicate the model elsewhere in the region and the emirate, though he said that the authorities would not always be able to provide guaranteed tenants (as was the case in Mirfa). “The private sector has to take some risk in public-private partnership projects,” he told OBG.

SME Development

The partnership model builds on the Investment Roadmap for Al Gharbia launched in 2012, which identifies major opportunities for private investors in the region and provides them with market research information.

The authorities are also working to develop the region’s small and medium-sized enterprise (SME) segment in a similar fashion, in part by putting local SMEs in touch with developers for major projects in the region in order to identify areas in which small firms can offer services supported by government assistance. Speaking to OBG, Al Hosani cited an example of a local firm that had developed a gym and swimming pool complex in Madinat Zayed, aimed initially at Etihad Railway employees. The authorities supported the project by providing it with a year’s free rent, and the gym’s owner is now seeking to expand into other locations in the region.

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The Report: Abu Dhabi 2016

Al Gharbia chapter from The Report: Abu Dhabi 2016

Cover of The Report: Abu Dhabi 2016

The Report

This article is from the Al Gharbia chapter of The Report: Abu Dhabi 2016. Explore other chapters from this report.