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THE MIDDLE EAST’S BEST-KEPT SECRET

Dubai has become synonymous with luxury in the United Arab Emirates, but Abu Dhabi, its oft-forgotten co-emirate and neighbor to the south, holds more wealth, oil and land than the six other federation members combined. Now Abu Dhabi is following Dubai’s blueprint with a real estate boom that includes more than $60 billion worth of planned developments. Retail plays a big part in many of these projects, and the emirate says it aims to become a global tourism hub, with travelers from all continents crossing paths at the fast-growing Abu Dhabi International Airport.

In May executives of locally based developer Aldar flew to Spring Convention in Las Vegas to spread the word among retailers about the emirate’s rich demographics. One of the nine planned developments there is Yas Island, which will feature a 2.3 million-square-foot, three-level shopping center, a Ferrari theme park, some residential space, a resort hotel and office space. The project is scheduled to open in 2009. Investors worldwide are betting on Abu Dhabi’s boom, says Ronald Barrott, CEO of Aldar, which placed $13.5 billion in convertible loan notes after a road show to raise funds. But filling the retail space in these projects takes finesse, because many foreign chains have misconceptions about Abu Dhabi, Barrott says. For one thing, they do not realize the sheer size and spending power of the population. Abu Dhabi has a population of 1.6 million and enjoys the highest yearly per capita income level in the world, calculated at 169,500 dirhams ($46,150) in 2006, according to the Abu Dhabi Chamber of Commerce and Industry. Abu Dhabi controls 10 percent of the global oil supply and says it expects that supply to last for 110 more years.

The emirate receives about 7.5 million visitors per year, Barrott says. About 80 percent of the residents are expatriates who came from Bangladesh, Egypt, India, Pakistan and the Philippines to work in the oil industry. About 70 percent of the shoppers at Aldar’s projects will be locals, he says. And shopping is recreation in AbuDhabi, he adds. Owing to the sweltering climate (the temperature averages about 106 during the summer), Abu Dhabi’s shoppers spend twice as much time in malls as their American counterparts, says Barrott. At the two existing malls, the shops are open from 11 in the morning to 11 at night, he says.

— Kerri Linden

CAPITALAND’S PLAN

Aldar has no monopoly on development in Abu Dhabi, however. Singapore-based CapitaLand is entering too. The developer has joined Mubadala Development Co., an investment arm of the Abu Dhabi government, to build a $4 billion, 15 million-square-foot, mixed-use project around the Zayed Sports City Stadium. This project is to contain 1,000 residential units and 130,000 square meters (1.4 million square feet) of commercial space. The initial investment for the project’s first phase comes to $300 million.

Aldar seeks American chains

Aldar is eager to recruit retail chains of all types and says American retailers will find landlord-tenant relationships in Abu Dhabi are similar to those in the U.S. Aldar is seeking to have international retailers make up about 30 percent of the tenant base. Home decor, electronics and wireless technology are among the sectors most in demand among Abu Dhabi’s consumers. Aldar’s CEO Ronald Barrott says he is hopeful that the saturated U.S. market will lead chains to seek sales growth overseas. “It’s time the American stores look into more markets,” he said.