Abu Dhabi realty sales to top $2.5bn this year

‘Abu Dhabi’s real estate sector is set to witness strong growth driven by the pragmatic economic policies of the government and the increasing focus by real estate developers on the development of affordable housing for the middle-income segment,’ Tamweel's CEO Adel Al Shirawi told the Abu Dhabi Economic Forum.

‘As the population continues to grow, the demand from the middle-income segment is expected to continue to increase. Developers in Abu Dhabi have already begun to address this niche.’

He believes that the leasehold property law currently in place in Abu Dhabi will spur growth in the real estate sector: ‘Industry experts often call for a freehold property law in Abu Dhabi in line with the one currently in existence in other emirates to further the growth of real sector.

‘We believe that 99-year leasehold property provides adequate legal backing for this asset class. This is corroborated by international securitisation institutions that have readily securitised leasehold properties.’

Leasehold premiums

Al Shirawi added that premium resale value for leasehold property in Dubai, for instance, is currently in excess of 90 per cent, indicating buyer’s confidence in the government and its leasehold law.

He pointed out that developers need to improve the quality of their developments to meet global standards and ensure that all delivery schedules are met in order to maintain and drive growth in the UAE real estate sector.

The Tamweel CEO spoke as part of a panel discussion titled, ‘Real Estate Development,’ which focused on the emergence of large real estate development companies and huge real estate projects that are reshaping the urban landscape. The discussion also considered the implications of market absorption of new supply.

Other speakers on the panel discussion were: Faris Suhail Al Yahbouni, Managing Director of Sorouh, Ahmed Al Yafie, Chief Operating Officer of Al Qudra Real Estate and Akram Abou Hamdan, General Manager of Al Mawared of Jordan.

2007 a big year

Abu Dhabi is clearly developing its real estate sector at a considerable pace and 2007 will be the first year for big sales by the major developers.

All the indications are that strong demand is evident for Abu Dhabi realty with foreign institutional buyers also expressing interest, something not yet seen in Dubai where a correction is now awaited.

The depth of equity investment in the UAE capital is underlined by Mr. Al Shirawi’s prediction that less than one-third of the $2.5 billion in estimated 2007 sales will require mortgage finance. What western market could possibly boast such wealthy buyers?

It is also arguable that this leaves considerable scope for the Abu Dhabi market to gear-up in the future which could firm up property prices.