Aabar has signed a US$2 billion deal with China State Construction Engineering Corporation to develop 30 properties in Abu Dhabi.
Aabar signs $2bn deal with Chinese
Aabar has signed a US$2 billion (Dh7.34bn) deal with China to develop 30 properties in Abu Dhabi.
China State Construction Engineering Corporation has an agreement with Aabar, an Abu Dhabi Government investment vehicle, to develop the projects including office buildings, hotels and apartments, the Chinese company said.
Industrial and Commercial Bank of China (ICBC) will provide Aabar with the funding, while China State Construction will be the contractor for the projects, China State Construction said in a statement to the Shanghai stock exchange yesterday according to official Chinese media.
Aabar declined to comment.
"Aabar will take its revenues generated from crude oil and finished oil trade to repay ICBC," according to a report in the China Daily, the state-run newspaper.
"According to the contract, the project involves building 30 properties including five-star hotels, office buildings and high-end apartments," it added.
The development is the latest in a series of major commercial alliances between China and Abu Dhabi.
"Where we are seeing foreign activity is generally coming from Asia," said David Dudley, the head of Jones Lang LaSalle's Abu Dhabi office. "There is significant [construction] activity from [South] Korea and from China."
Aabar is a subsidiary of International Petroleum Investment Company, in turn owned by the Government of Abu Dhabi.
Tariq Qaqish, a fund manager at Al Mal Capital in Dubai, said the project would help Abu Dhabi because it would bring cash from abroad and leverage using foreign banks. ICBC opened its first branch in Abu Dhabi in 2010.
The property deal adds to growing bilateral ties in the energy sector.
Wen Jiabao, the Chinese premier, visited Abu Dhabi earlier this year and oversaw the signing of an agreement between Abu Dhabi National Oil Company (Adnoc) and its Chinese counterpart, China National Petroleum Corporation (CNPC), to collaborate on undeveloped oil and gas prospects in Abu Dhabi and oil storage.
Abu Dhabi is expected to award China a huge area of land for oil exploration and production, and the emirate has become an increasingly important supplier of crude to Beijing.
Adnoc agreed last year to increase oil exports to CNPC to 200,000 barrels daily starting in 2014, according the state news agency WAM. The deal follows a 2009 agreement between the two companies to cooperate on oil trading, shipping and storage.
Chinese firms have secured billions of dollars worth of contracts in the UAE construction sector in recent years.
High-speed communications networks in the Emirates have also been installed by companies from China. There are more than 1,000 Chinese firms operating in the UAE and trade between the two countries reached $35bn last year.
Excluding oil, bilateral trade increased 9 per cent in 2010 to reach $12.5bn, according to the UAE's Ministry of Foreign Trade.
In November, Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, made its first investment in China by forming a joint venture to create a $150 million plant to supply material for the UAE's aluminium smelting industry. Mubadala signed an agreement to develop the facility with Jiangsu Surun High Carbon Company and said the project was likely to be the first of a series of investments it makes in the world's second-largest economy.
Other investments from the UAE include Borouge, the Abu Dhabi petrochemicals maker, which opened a factory near Shanghai about two years ago.
Dubai's DP World has stakes in ports in locations including Hong Kong, Tianjin and Qingdao.
Meanwhile, the number of tourists to the UAE from China has surged since the Emirates gained "approved destination status" in 2009.
Abu Dhabi at the beginning of this year announced it planned to push ahead with a number of landmark projects.