Wanderlust…

The International Reporting (and Life) Adventures of Vivian Salama

Abu Dhabi’s Economic Ambitions Held Back by Dubai-Style Real Estate Slump

Posted by vmsalama on November 3, 2011

By Vivian Salama 

Nov 3, 2011

Bloomberg/Business Week

Abu Dhabi, the emirate that bailed out Dubai in 2009, set out to avoid the pitfalls suffered by its Persian Gulf neighbor with a decades-long plan to replace oil revenue with industry and tourism as drivers of growth.

Now those plans need to be scaled back as companies behind some of the sheikhdom’s biggest developments cut jobs and postpone projects, said Ghassan Chehayeb, associate director of research at Dubai-based Exotix Ltd. Delays include beach-front apartments, the first office building that makes more energy than it uses and branches of the Louvre and Guggenheim museums.

Abu Dhabi Guggenheim Museum

“Abu Dhabi has to face the economic realities,” Chehayeb said. The emirate’s plan “was a little too ambitious and they’re realizing now that many of those projects might not make as much economic sense as they initially thought.”

Abu Dhabi, the United Arab Emirates capital and the holder of 7 percent of the world’s oil reserves, plans to invest $500 billion in industry, tourism and culture to increase non-oil revenue to 64 percent of the economy from 41 percent from 2005 to 2007. In Dubai, debt-fueled property speculation drove up prices and spurred development until the global credit crunch in 2008 caused the market to crash.

The Abu Dhabi government hasn’t announced any changes to the development blueprint, called Vision 2030, since it was first published in 2008. The emirate’s Urban Planning Council wouldn’t say whether the plan is on track when contacted by Bloomberg.  (Click here to read more…)

RELATED STORIES I WROTE:

Abu Dhabi Delays Louvre, Guggenheim, Zayed Plan Citing ‘Magnitude of Work’

U.A.E. Forecasts 400 Million-Dirham Budget Deficit in 2012

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