x Abu Dhabi, UAETuesday 25 July 2017

Shops, gyms, pools and libraries: Abu Dhabi's Dh3bn model for public private partnerships

Interactive graphic: Abu Dhabi Municipality believes that plans to build 40 new community centres across the capital will provide a working model for public-private partnerships.

Private investors will be invited to build small-scale shopping malls alongside community facilities such as swimming pools, gymnasiums and libraries. Picture courtesy Municipality of Abu Dhabi
Private investors will be invited to build small-scale shopping malls alongside community facilities such as swimming pools, gymnasiums and libraries. Picture courtesy Municipality of Abu Dhabi

Abu Dhabi Municipality is hoping that plans to build 40 new community centres across the capital will provide a working model for public-private partnerships.

Under a project announced this week by the municipality, private investors will be invited to build and operate small-scale shopping malls alongside community facilities such as swimming pools, gymnasiums and libraries.

The Dh3 billion (US$817 million) plan is aimed at attracting tenants to projects that lack the sorts of facilities provided by master-planned developments. These include neighbourhood centres, which will contain convenience shops, leisure facilities and government services, and two larger district centres with supermarkets and other facilities.

Six community centre schemes are already under construction.

The plan will have investors and developers bid to take development leases (or musatahas) of allocated land in the capital for a period usually of between 15 and 30 years.

Developers will build and operate the community centres, which will range between 7,000 and 21,000 square metres. They will pay the agreed ground rent to the municipality and collect rent from the retail element of the scheme.

At the end of the period the operator can agree to extend the contract or the municipality can take the land back.

Previous public-private partnership infrastructure developments in the capital have faced setbacks such as the Dh10bn Mafraq to Al Ghweifat Highway.

Property experts, however, said they were confident that smaller public-private partnership schemes would be more likely to succeed.

According to the municipality, smaller centres will cost between Dh30 million and Dh40m.

Larger centres may cost Dh120m to Dh150m. "These schemes are more of a hybrid between a [public-private partnership] and a straightforward property financing," said Martin Preston, a partner at Norton Rose in Dubai who specialises in infrastructure project finance.

"There is more familiarity with the concept of property financing in the region at the moment which works in their favour. And the schemes themselves are smaller, so banks could be more willing to lend."

"There is definitely good demand from retailers and developers to build community mall space," said David Dudley, the head of Jones Lang LaSalle's Abu Dhabi office, which advised the municipality on six community mall public-private partnership projects.

"The retailers - especially the food retailers - want to expand in the capital and although there is a big volume of space coming forward in Abu Dhabi, most of that is in big regional malls. People also need community space."

"There are a number of projects in Abu Dhabi which are being built on these lines," added Stephen Flanagan, director of professional services at Knight Frank, which advised the municipality on community mall public-private partnerships tenders.

"Musataha is seen by financial institutions as a bankable concept," he said.

 

lbarnard@thenational.ae