Gulf provides fuel for social infra

The need to provide the Gulf’s growing population with more advanced education and healthcare facilities is providing a major source of work flow for the region’s infrastructure sector. Figures indicate that, within the Gulf Cooperation Council (GCC), social infrastructure projects now comprise around 36 percent of the pipeline of current construction work. 

According to recent research published by Deloitte, $500 billion will be spent on major infrastructure projects in the GCC over the next five years, driven primarily by economic development and diversification away from the traditional petrochemical and hydrocarbon industries. Backed by vast oil-based reserves and government stimulus packages, the economic prospects of the GCC region have remained positive, despite ongoing political unrest in the wider Middle East region and the current global economic headwinds. 

The need to provide the Gulf’s growing population with educational and healthcare facilities as well as the social and political focus on creating ‘cities of the future’ is providing a viable source of opportunities for the region’s infrastructure and construction sectors. With the objective to ensure urban environments are sustainable, highly liveable and maintain a balance between the population, the economy and the environment, social infrastructure projects are not only rising to the top of urban planners’ master lists, but are also driving the positive prospects of the region’s long-term economic growth. 

Efforts to maintain a balanced and diversified economic base have remained the primary focus for many regional governments as evidenced by a steady stream of investments into construction and infrastructure developments. These countries are now looking at how to take advantage of existing strengths to develop upstream industries.

Some of the biggest investments currently underway include Qatar’s plan to spend $100 billion hosting the 2022 World Cup and achieving its 2030 vision, and Saudi Arabia’s capital spend programme, which is expected to reach $400 billion over the next 10 years alone. The United Arab Emirates (UAE) was ranked as the second-largest market for investments over the past year by Deloitte, with the emirate of Abu Dhabi in particular driving this growth through over $12 billion in awarded contracts. As outlined in the Capital Plan 2030, Abu Dhabi has prioritised the growth of education and healthcare provision with facilities that are of a high standard and that will allow the sustainable growth of the emirate. 

Population growth 

The ‘soft’ infrastructure focus in the emirate of Abu Dhabi is driven by an expected population of over 3 million people by 2030. It is conceived to allow the emirate to continue growing to accommodate 5 million people or even more. Hospital beds are expected to increase from around 3,000 to closer to 6,000 by 2013 in response to urban change in the emirate of Abu Dhabi. 

The expected population growth is driving opportunities in social infrastructure, focusing in particular on education and healthcare projects. The rise in lifestyle diseases such as diabetes has led to a need for improved accessibility to healthcare services for patients along with a desire to reduce healthcare tourism, where people seek medical treatment in other countries. The Imperial College London Diabetes Centre and The Cleveland Clinic Abu Dhabi (CCAD) both demonstrate the emirate of Abu Dhabi’s commitment to enhancing healthcare services to its growing population. 

The emirate of Abu Dhabi government’s objective to diversify the economy is supported by the need to invest in education facilities that strengthen the country’s capabilities and competitiveness through development of its human capital. 

Collaboration is key 

Growth on this scale presents great opportunities, but to take advantage companies wanting to develop and invest must work in close collaboration with the relevant government agencies which are tasked by the government with bringing these major projects to successful completion and to bring with them world class skills, technology, know-how and experience.
Mubadala Real Estate & Infrastructure (MREI), a business unit of Mubadala Development Company PJSC, has led some of the UAE’s flagship social infrastructure projects in recent years including the new campus facilities for Zayed University, UAE University and Paris-Sorbonne University Abu Dhabi. Now set to begin offering its capabilities and skills beyond UAE’s borders, MREI is harnessing the experience of recent projects. 

One such flagship project is the development of Zayed University Abu Dhabi’s new campus, which opened its doors for the first time in September 2011. This new facility meets the latent demand for higher education and provides a truly inspirational learning environment for students and teaching staff alike. Zayed University now has capacity for up to 6,000 students a year in its state-of-the-art facility in Abu Dhabi’s new ‘Capital District’. 

The design and construction of the almost AED3 billion (€631 million; $817 million) new campus facility began in November 2008 and was completed in July 2011. Leading local and international banks were involved in the debt financing of the deal which included both an international facility, a mezzanine facility and an Islamic tranche and was co-ordinated by the MREI group in close collaboration with Mubadala’s Structured Finance and Capital Markets team. 

One of the key lessons for MREI in the Zayed University development was the importance of bringing the right team together on projects of this complexity and combining leading practitioners from within Mubadala and internationally. 

MREI also completed the third and final stage of the UAE University in the city of Al Ain in July 2011, which included male academic and teaching buildings together with a first-class dining and sports 
hall. This project was the first public-private partnership (PPP) project initiated in the emirate of Abu Dhabi in the social infrastructure field and showcased the successful culmination of a wide-ranging initiative to bring together several academic and residential campus plots spread over different areas in the city of Al Ain to provide a modern, state-of-the-art teaching campus incorporating recreational and residential infrastructure. 

The new campus can accommodate over 15,000 students across approximately 290,000 square metres of newly built first-class faculty buildings. The UAE University project was also delivered as a PPP through a debt package of $410 million with a 15-year debt tenor. 

Improving the way that large-scale, complex infrastructure projects are realised and managed is an important factor for any company seeking opportunities in this region. In the emirate of Abu Dhabi, MREI plays an active role, creating a consortium of highly qualified experts and working closely with them throughout the term of the project to make sure it is delivered to time, cost and best-in-class quality parameters. Beyond the emirate of Abu Dhabi, collaboration and knowledge exchange between relevant parties is equally important to ensure the success of social infrastructure projects. 

The Paris-Sorbonne University Abu Dhabi campus is another recent success story for MREI. The $327 million PPP project has capacity for 2,000 students and delivers long-term value and cost savings for the client. This project involved the development of a purpose-built campus which provides world-class educational, recreation and residential facilities across approximately 93,000 square metres of newly built area. The phased project was completed on 31 August 2010 on time and to budget. 

Understanding opportunities 

Together, these university projects represent a higher education capacity in excess of 20,000 students annually. They are vital in underpinning the rapidly evolving society and success of the UAE in meeting the requirements of future generations.
Understanding how these social infrastructure opportunities fit strategically into the holistic vision of the economic development of both the UAE and the wider Gulf region is central to a successful and collaborative partnership with governments and their agencies and is vital to the long-term success of such projects. But most importantly, operating in the Middle East requires a heightened appreciation of the wider context in which these projects are commissioned and the overarching strategy and vision which they are part of.

*Saed Asaad Arar is a senior vice president at Mubadala Real Estate & Infrastructure (MREI) in Abu Dhabi