Abu Dhabi invests $1tn into infrastructure

Abu Dhabi in the future?

After the success of the Abu Dhabi F1 Grand Prix on Yas Island, Abu Dhabi has decided to spend 25 times the amount it spend on the Yas Island project on the rest of the region's infrastructure.

According to Zawya, the money will be used on roads, power plants and a metro system. In terms of stimulus packages, it eclipses recent ones given by the US government and, according to Sultan bin Saeed al Mansouri, the Minister of Economy, "will lead to extraordinary demand for building materials and technological innovations, thus boosting the economy further."

The capital of the UAE has not been shy in splashing its money on massive projects and currently has ten civil projects in process worth US$208 billion. In March 2009, Mark Goodchild, Exhibition Director for organisers IIR Middle East, said of Abu Dhabi's infrastructure projects.

"The big difference for Abu Dhabi compared with other cities is that while the emirate will collect less in revenues from oil than the records set in 2008, the capital has been financially prudent and has a sovereign wealth fund estimated at US$328 billion at the end of 2008."

"While there has been some doubt expressed about the timescale and magnitude of several projects across the UAE, the sheer scale of those continuing to take place in Abu Dhabi is truly remarkable by any international standard," Goodchild added.

Massive investment

Currently, Abu Dhabi's biggest projects include Saadiyat Island, another major offshore development costing US$28 billion, the US$22 billion Masdar City project, billed as the first zero-carbon, zero-waste city and the Khalifa City project. This is the single biggest project in the capital and has a budget of US$40 billion.

The plan to invest in infrastructure is part of the UAE's main plan to wean its economy off oil. Once reserves run dry, the UAE is hoping to become a business, economical and tourism hub. Not just that, but in the aftermath of the global recession, reviving growth is a way to create jobs, lower the costs of running businesses and attract more foreign investment.

Using Yas Island as a template, Abu Dhabi's infrastructure stimulus package will account for 17.5 percent of the Dh43.6 billion (US$11.9 billion) budget for 2010.

At a panel discussion about the Yas Marina Circuit held by New York University Abu Dhabi last month, Khaldoon al Mubarak, the circuit chairman, said the development would act as a blueprint for the city's future.

"We used Yas as almost the future urban component within the overall city of Abu Dhabi and we wanted to test things out," he said.

Here is hoping Abu Dhabi's growth will be as successful as the Yas Marina Circuit.

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