The past few years have transformed the UAE’s tourism landscape. While Dubai has clearly positioned itself as a tourist hotspot with shopping uppermost in its mind, Abu Dhabi is differentiating its proposition as a cultural attraction.

Most of the projects aim to offer more than just shopping to tourists. The likes of the Louvre, Guggenheim and Zayed National Museum would enhance the capital’s image as a cultural destination.

With this objective in mind, the government is enticing private players to develop projects. Public Private Partnerships (PPPs) is a fairly common approach to achieve this end.

Infrastructure projects in leisure and tourism often use PPPs in the initial phases of development. In Sochi, Russia, site of the 2014 Winter Olympics, the Russian government is actively soliciting participation of private entities.

The Abu Dhabi Municipality is experimenting with the PPP model for tourism projects in the capital. The approach involves establishing legislative structures with the aim of motivating the private sector to invest and propping up the drive of attaining sustainable development.

Under a Dh3 billion project announced recently by Abu Dhabi Municipality, private investors will be invited to build and operate small-scale malls alongside community facilities such as swimming pools, gymnasiums and libraries. The differentiating factor would be amenities not provided by masterplanned developments like convenience shops, leisure facilities and government services, and two larger district centres with supermarkets and other facilities.

Souq destination

The Municipality has unveiled plans for a new 150,000 square metre souq destination near Abu Dhabi Island to transform the city and enhance its cultural heritage. The plan will have investors and developers bid to take development leases (or musatahas) of allocated land for a period of 15 to 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 rental income from the retail elements in the scheme. At the end of the period, the operator can agree to extend the contract or the Municipality can take the land back.

For other projects, the Municipality is to partner private sector firms to develop communal markets, highway service stations and other tourist-friendly features at assets owned by the municipality. The organisation has drawn up a masterplan for developing a range of sites to provide sports, educational and public service facilities at public markets that will contain community service centres.

Ownership

These projects will be developed by the private sector under a build, operate and transfer model over a specified period before eventually handing ownership back to the government.

PPPs are seen as a speedy, efficient and cost-effective way of delivering large-scale projects. It provides added value through the integration and cross-transfer of public and private sector skills, knowledge and expertise.

This remains a win-win model for UAE economy since there are no tax burdens to be borne by residents and the government remains sufficiently funded to provide liquidity to these projects for the long-term. The government will achieve the required expertise to handle complicated projects and private parties stand to gain profits upon successful completion.