$136bn in Abu Dhabi projects may overtake Dubai, Doha

According to new figures from the Abu Dhabi Chamber of Commerce and Industry GDP for the emirate will reach $159 billion by 2010 with the share of non-oil activities rising from $44 billion to $72 billion.

Investment totals are huge with $136 billion targeted for construction and building, $55 billion for tourism, $9.5 billion for water and electricity and $33 billion for industry.

Per capita GDP in Abu Dhabi will be $54,500 this year on the forecast of the ADCCI which is the highest in the world. The private sector is also resurgent and expected to increase its share of GDP from 17 to 20 per cent in future years.

Rising activity levels

In the Gulf region Abu Dhabi is currently eclipsed by construction activity in both Doha and Dubai. But Doha's $65 billion plan for non-energy spending is clearly on a smaller scale, and Dubai's construction spending could be cutback from its current rate of exponential growth if supply exceeds demand next year.

That will probably leave Abu Dhabi in the pole position by 2010 with its depth of financial resources ensuring that real estate construction continues undisturbed by fluctuations in the oil price.

There is also a strong element of catch-up in Abu Dhabi, more so than in Dubai and even Doha. For a decade long moratorium on development activity has only recently ended, and for such a wealthy city the urban landscape is out-of-date and in need of upgrading to world standards.

But the new Shuaa Capital and Colliers International study of UAE real estate highlights the extremely high level of occupany in Abu Dhabi today with a projected supply of 1,100 units this year compared to a demand for 21,900 units.

2009 before oversupply

Indeed, the same shortfall is noted for 2008 when the supply is projected at 24,000 and just 11,000 units are scheduled for delivery. It is only by 2009, with 150,000 new units, that supply will catch up with demand.

Thus for real estate investors it is arguable that Abu Dhabi offers the most favorable outlook in the Gulf. Rents will stay on a rising curve, while capital values will be underpinned by high and rising demand.

So it will be here that the real estate market will be the liveliest for the rest of this decade, while Dubai and even Doha may have had their best days. For property markets move in cycles and the Abu Dhabi property cycle is just getting going.