Study expects installed UAE district cooling capacity to grow at 63 percent annually up till 2012

Abu Dhabi, UAE, 20 May 2007: Total installed District Cooling (DC) capacity in the UAE is expected to reach four million tons of refrigeration (TR) by 2012 at a compounded annual growth rate of 63 per cent, according to a report. In 2005, total DC capacity in UAE was 130,000 TR.

Based on the findings of the report, the UAE appears to be the most promising market in the GCC region. “The country is not the largest market in terms of size, but the initiatives taken by firms in the UAE to adopt and promote DC systems have made it the focal point of the industry for the entire region,” said the report, which was prepared by Eric Chang of The National Investor (TNI). “In fact, leading firms based in the UAE, such as Tabreed have formed alliances and/or subsidiaries in the other countries such as Oman and Bahrain,” it pointed out.

Another factor has also played a major role in DC capacity growth in the UAE. “The real estate activity in the UAE far exceeds that of other countries in the Gulf region. In 2005, the UAE accounted for 45 per cent of projects under construction in the GCC and 65 per cent of the total value of real estate projects. Saudi Arabia, the largest economy of the GCC, is the second largest property market with 14.3 per cent of the total,” the report added.

The market for district cooling in the GCC is also expected to witness significant growth.

In fact, the climatic conditions in this region, coupled with strong economic growth and a booming real estate market, will give a strong boost to DC capacity in the GCC in the next five years. According the report’s statistics, total installed DC capacity in the GCC region is expected to reach 9.6 million TR by 2010 as compared with 745,000 TR in 2005, a compounded growth rate of 66.7 per cent.

Among other companies, UAE-based Tabreed is ideally based to reap the benefits of this growth. Founded in 1998, Tabreed is the Middle-East’s first commercial district cooling company. It designs and builds district cooling plants to supply chilled water through a pipeline network. Tabreed is one of the world’s largest DC operators and the largest in the GCC region. It is the only DC pure-play in the world. Until recently, Tabreed was the only DC firm in the UAE. However, four other firms have been launched in the past three years. Three of these (Emaar District Cooling, Palm District Cooling, and Emirates District Cooling) are affiliated with property developers. The fourth entrant (Empower) is a Dubai government-owned venture serving the cooling needs of all Dubai Holding projects. “These affiliations ensure a steady projects pipeline given the long-term nature of DC contracts (usually 15-20 years),” the TNI report concluded.

About The National Investor: The National Investor (TNI) is a privately owned regional investment and merchant banking group. The firm comprises seven strategic business units covering investment and merchant banking, private equity, asset management, real estate, investment research, principal investments and client advisory. In addition, the firm has an associate company, GNSC, which provides brokerage services as a registered member of the Abu Dhabi Securities Market (ADSM) and the Dubai Financial Market (DFM).