Main | Residential | Commercial | Hospitality | Retail development

The Abu Dhabi Property Market

Source: Oxford Business Group

The market looks set to expand, with a focus on the high end

Abu Dhabi is the largest and wealthiest emirate in the UAE. It covers 87% of the total land mass of the UAE, houses 34% of its population and holds 95% of its oil reserves. Funds from Abu Dhabi have traditionally been one of the strongest elements underpinning the real estate and construction sectors in Dubai, and with the large scale developments cropping up about the emirate, foreign and domestic investment is making a return.

Abu Dhabi's economy grew by 10% in 2005 and is expected to expand by 8.5% in 2007. The emirate has also been attracting foreign direct investment in different sectors. Surplus liquidity is being diversified away from oil with the development of free zones such as the Industrial City of Abu Dhabi boosting non-oil GDP.

New investments in Abu Dhabi between 2005 and 2010 are estimated to reach $135bn, with a focus on energy, environmental projects, education, health, industry, real estate and tourism. The size of the Abu Dhabi real estate development market is not big enough to absorb the immense liquidity and local investors have poured huge amounts into new developments in other markets, primarily in Dubai, while supply in the domestic market has been tight.

Property laws in Abu Dhabi were changed in 2005 when local calls were allowed to buy and sell their real estate, GCC nationals were allowed freehold ownership and other foreign nationals were given the right to develop and own buildings, as well as buy property on a leasehold basis in certain designated areas.

Following the change to property laws, a resulting increase in investment has led to forecasts that, between 2005 and 2010, $30bn and $11bn will be pumped into the real estate and tourism sectors, respectively.

Investment funds also continue to flow out of the emirate, with developers from Abu Dhabi taking a more active role throughout the region. Abu Dhabi Investment House is continuing with its $160m investment in the Beirut Gate project, while real estate company Manazel reports that it is pursuing the $4.5bn worth of investment projects in Qatar, Saudi Arabia, Egypt, Morocco and the EU in 2007 and 2008. Most significantly in March 2007, Sorouh, Aldar Properties, Al Qudra and Reem Investments announced that they have joined forces to create Al Maabar, an integrated real estate group pursuing international opportunities.

In addition, Abu Dhabi has also recently revealed the urban development plan for 2030, which illustrates the emirate's commitment to structured development as well as attention to cultural and environmental goals. The plan, which is already being implemented envisages an intercity train network and metro lines, and describes specific land uses, building heights and transportation plans for Abu Dhabi.

The Growth estimates, used as a part of the master plan, foresee an increase in residents from 1.8m in 2006 to 3.1m in 2030. The number of residential units is to expand from 251,000 in 2007 to 411,000 in 2020, with hotel rooms climbing from 21,000 to 74,500. The plan also projects an increase in retail space to 2.5 sq. metres by 2020 and 4 m. by 2030.

Key developers
Aldar Properties continues to lead the way in the development stakes with a number of major mixed-use developments that include the Central Market and the $14.7bn Al Raha Beach. Al Raha Islands includes Surouh Real Estate's $7bn Shams project, built over 1.8m sq. metres of the island and eventually housing up to 100,000 residents, as well as projects from Tamouh Investments and Reem Investments.

The $15bn Saadiyat Island, Hudeiryat Island and Jubayl Island projects will create commercial, industrial and residential space. Saadiyat Island, Lulu Island, Al Raha Beach and Al Reem Island are some of the projects in which foreigh ownership has been permitted.

Main | Residential | Commercial | Hospitality | Retail development