HYPER-SPEED AHEAD

Abu Dhabi 2019 | TRANSPORT | FOCUS: HYPERLOOP TRANSPORT

The development of a hyperloop in the Al Ain region bears triple significance for the infrastructure sector in the Emirate.

On April 18, 2018, Abu Dhabi-based Aldar Properties signed an MoU with US-based Hyperloop Transportation Technologies (HyperloopTT) for the implementation of a commercial hyperloop system at the Seih al-Sdeirah community development in Abu Dhabi's Al Ain region. The hyperloop system is but one part of the Strategic Transportation Master Plan (STMP) launched in 2016, which so far has advanced progress on the railway network revolutionizing the way cargo is transported across the region.

A proper infrastructure plan, though not yet drafted, would likely include an advanced mobility R&D center, a demonstration and visitor center, and an innovation hub, in addition to a full-scale commercial hyperloop transport system. Such a system would include a station/loading platform, a capsule or pod that carries passengers or cargo, and a tube through which the capsule travels based on electro-magnetic propulsion and passive magnetic levitation systems that reach speeds up of up to 1,220km/hr. Nonetheless, the current explorative nature of the agreement bears a three-fold significance for the Emirate.

Firstly, such an MoU highlights the increased role of both public and private entities in Abu Dhabi's transportation sector. Aldar Properties and HyperloopTT reached an agreement that is part of an initiative of Abu Dhabi's Department of Municipal Affairs and Transport (DMAT). The US private company submitted to DMAT the initial findings of the six-month study, with the support of ATKINS consultancy, for the proposed hyperloop network to link Abu Dhabi and Al Ain municipality.

The second implication is perhaps the most commercially relevant. Abu Dhabi and Dubai are inevitably destined to get closer in the following decades, a trend for which the most rapacious real estate developers are eager to secure long-term return on investments. Indeed, Seih al-Sdeirah is part of the Al Ghadeer master plan, located on the border between the Dubai and Abu Dhabi, close to the Expo 2020 site. As stated by Aldar Properties' CEO Talal al-Dhiyebi, “Al Ghadeer sits at such a strategic point within the UAE—close to major growth areas of both Abu Dhabi and Dubai—that it makes sense to pair it with rapid transport opportunities." Meanwhile, more developments such as Manazel's Al Reef and others give reason to believe in long-term growth for real estate between the two emirates. Though, it is still unclear what will be the impact of the hyperloop on the prices of properties within the current urban landscape of both cities. In the likely scenario of a cost-per-unit convergence across the two emirates, investors should seriously consider exploiting the current market glut in Abu Dhabi to secure long-term gains.
The third implication of the MoU is the most speculative, but at the same time with the potential to be the most profound. It is no secret that it has been a rough couple of years for Abu Dhabi's air transport sector. Flagship carrier Etihad Airways showed a USD1.8-billion debt half-way through 2017; furthermore, Abu Dhabi's aviation sector was the only in the region to post a significant YoY decrease in arrivals in 1Q2018, with a decrease of around 10%. At the same time, the number of visitors in Abu Dhabi has grown steadily in recent years. Thus, Abu Dhabi is gaining significant visibility on the world tourist map, but travelers are still more inclined to fly through Dubai. With Dubai's Al Maktoum Airport sitting right on the border of the two emirates, the recent extension of the Mohammed bin Zayed Highway, and the potential construction of further phases of the hyperloop, Abu Dhabi will need major efforts to prevent its air traffic from pivoting further north.

Although much is yet to be decided on, the hyperloop MoU highlights once more Abu Dhabi's relentless willingness to explore seemingly futuristic technology. By connecting infrastructure, mobility, and communities, the Emirate is sending both to institutional and foreign investors a clear message of the country's economic and urban planning vision.