Construction of the Zayed National Museum and the Guggenheim museum on Saadiyat Island is to be delayed as part of a major strategic review of development plans for the multibillion-dollar project.
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The Tourism Development and Investment Company (TDIC) is near to completing the review, which will result in a staggered construction schedule for the island's centrepiece museums.
TDIC originally intended to build the two museums at the same time as the Louvre Abu Dhabi. But the new plan, which still has to be approved by the Abu Dhabi Executive Council, calls for the Louvre to be built first, followed by the National Museum and then the Guggenheim.
"It makes more sense to bring these to market as each museum has a chance to build a following," said Shaun O'Connor, the chief financial officer for TDIC, the master developer of the project. "It makes more sense for Abu Dhabi to stretch this out over a time period."
Mr O'Connor and TDIC officials stressed that none of the projects had been cancelled. Peripheral work on the National Museum and Guggenheim will continue, including amassing art collections.
But the primary construction is on hold to give each museum its own moment in the spotlight, said Mr O'Connor.
The Louvre Abu Dhabi, the result of a formal treaty between Abu Dhabi and France, is still officially scheduled for a 2013 opening, but officials acknowledge that it is likely to be delayed at least a year. Construction contracts still have not been awarded for the museum, which has been designed by the French architect Jean Nouvel.
"We are prepared to take quick action on the Louvre, but we will not take the step until we have the official green light," Mr O'Connor said.
The museums are to be the centrepiece of the Saadiyat project, which is designed to serve as the cultural centre of Abu Dhabi. Plans call for art, theatre and heritage complexes, hotels and retail outlets. The 2,600-hectare island development will also include housing for more than 145,000 people.
Yesterday, TDIC said it was extending the delivery dates for the museum because of the "immense magnitude of the work" and to "ensure that the quality is not compromised and allow each establishment the time needed to create its own identity".
A review of the projects will have only a "moderate impact" on the delivery timetable for each museum, TDIC said.
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The decision to delay the National Museum and the Guggenheim was based on a desire to create separate opening events for each museum, more than any funding issues, Mr O'Connor said.
"We do not have financial issues and we are not constrained," Mr O'Connor said. "We are looking at this as a real estate company and taking real estate decisions on when is the right time to do projects."
TDIC will need to raise Dh2 billion(US$544 million) to Dh3bn a year to fund construction of the projects in the next few years, Mr O'Connor said. In July, TDIC cancelled a $3bn bond offering, citing market conditions.
The company may "rethink going back out to capital markets" in the first half of next year, Mr O'Connor said. It is carrying Dh12bn of debt, including Dh7.4bn of bonds scheduled to mature in 2014.
"From a planning perspective, it does make sense to stagger the opening of the museums," said Martin Kolhase, a vice president and senior analyst for Moody's Investors Service. "Not only from a financial perspective, but you also don't want all these cultural assets opening in a 12 to 18-month period."
For the first time, TDIC is exploring the possibility of developing joint ventures to build infrastructure on Saadiyat, said Mr O'Connor. District cooling facilities and a sewage treatment plant are likely projects, he said.
"I don't believe the Government should have to own every asset in TDIC," Mr O'Connor said. "I think there are some tremendous opportunities for private money to come in."
The construction industry is likely to welcome the chance to participate in projects generating cash flow, according to Nick Smith, a partner at the built-asset consultancy EC Harris.
"Currently it is a buyer's market with the construction community hungry for opportunities," Mr Smith said. "[Joint ventures] may present opportunities for potential partners in return for some investment up front, and therefore there is likely to be some appetite for this."
Last Sunday, TDIC officials confirmed that the tender for the main construction contract on the Guggenheim had been put on hold, leading to speculation that the project might be cancelled. At the time, the company said the decision was part of a review of "project procurement strategy".
Yesterday, TDIC said it had decided to "extend the delivery dates for the museums".
A spokeswoman for the Guggenheim Foundation said the delays would not affect the development of the museum, which is already collecting modern art and training employees.
"This is a decision by TDIC relating to construction and does not affect the ongoing planning for the Guggenheim Abu Dhabi Museum," said Eleanor Goldhar, the deputy director of the Solomon R Guggenheim Foundation.
rbundhun@thenational.ae
