Awarding fresh construction contracts for stalled infrastructure projects such as Abu Dhabi Metro would support economic growth in the capital, say analysts after the emirate’s Executive Council approved billions of dirhams of infrastructure spending last week.

On Thursday, the Abu Dhabi Executive Council approved nearly Dh6 billion worth of development projects in Abu Dhabi emirate.

These included the awards of a Dh1bn construction package for a business district project in Madinat Zayed, a development originally intended to become Abu Dhabi’s second downtown as well as a Dh687 million residential project in Al Hayer, near Al Ain, and money for new roads and electricity substation works.

According to the Executive Council statement, the Madinat Zayed project will include the implementation of infrastructure works, such as roads, facilities networks and power supply to 704 commercial lots. The area will include a “multi-modal” public transport system, the statement said without elaborating.
Originally known as Abu Dhabi’s Capital District and later New Khalifa City, Madinat Zayed – in a triangle between Khalifa City A, Khalifa City B and Mohammed bin Zayed City – will house 300,000 people and 325,000 workers.

Plans for the district were originally drawn up between February 2008 and March 2009 and included a central Federal Precinct to serve as the UAE’s national seat of government, and a central space hosting seven grand boulevards that represent the seven emirates.

Since the fall in the global price of oil in 2014, Abu Dhabi has cut back on much of the emirate’s public spending, leaving many of the city’s planned infrastructure projects stalled.

These include the city’s planned 131-kilometre Abu Dhabi metro and light rail system, which was included in the city’s 2009 master plan for transport.

The first phase of the metro is expected to run 18 kilometres between Zayed Sports City in the south of Abu Dhabi island and Mina Zayed to the north with 5km below ground and 13km above ground.

Funding for the project was approved by Abu Dhabi’s Executive Council in March 2012 but appears to have been on hold since then.

“It can only be a good thing for the local economy that the government has announced this swath of new projects in and around Abu Dhabi,” said Edward Carnegy, the head of Cluttons’ Abu Dhabi office.

“Now we wait with bated breath to see whether any more money could be made available for other key infrastructure projects such as Abu Dhabi metro.”

Craig Plumb, the head of research at JLL’s Dubai office said: “Infrastructure spending as we have seen in Dubai, building a metro system has a positive effect on the surrounding areas. Office vacancy rates in the CBD areas of Dubai, which are close to the metro, stands at 17 per cent while in Business Bay where most of the office stock is away from the metro station, it stands at more than 40 per cent.

“And in areas such as JLT, apartments within walking distance of the metro sell or rent for a premium of around 10 to 15 per cent.”