A short history of Abu Dhabi real estate: Part two

To some extent at the start of 2007 Abu Dhabi real estate was very overshadowed by its dynamic and flashy neighbour Dubai, whose booming real estate sector is now very visible.

But visitors to the Cityscape Dubai 2006 event in December could not fail to notice that the biggest new project launch, the $40bn Yas Island from Aldar Properties, was in Abu Dhabi and not Dubai.

The Yas Island project will take at least a decade to complete and includes extensive leisure facilities around a Ferrari theme park as well as huge residential and commercial zones. And it is right opposite the already huge multi-billion dollar Al Raha Beach development from the same company, also situated conveniently close to the airport.

Sorouh Real Estate chose the final weeks of 2006 to unveil its one million square foot Central Park and the sales release of the surrounding plots to local and international investors. Central Park will include 12 mixed-use towers, restaurants, water canals, lakes, recreational and sports complexes. Work on the infrastructure of the project started in June 2007, and the first phase is scheduled for completion in 2009.

Sorouh grows its portfolio

Sorouh has already launched a number of major development projects that embody its slogan of building communities in perfect balance; such as its flagship project Shams Abu Dhabi, the Sky Tower slated to be the highest skyscraper in Abu Dhabi and the Golf Gardens residential development adjoining Abu Dhabi Golf Club.

Shams Abu Dhabi was launched as Sorouh's first prestige development. It is located on Al Reem Island, approximately 300 meters across from the north-eastern shore of Abu Dhabi city. It will occupy over 1,560 million square meters, accounting for about 25 per cent of Al Reem Island.

Residential projects will occupy 80 per cent of the overall space of the project while the remaining 20 per cent will be dedicated for commercial use and recreational facilities. Shams Abu Dhabi will be home for about 70,000 people.

According to figures released in early 2007 by the Abu Dhabi Chamber of Commerce, GDP for the emirate will reach $159bn by 2010 with the share of non-oil activities rising from $44bn to $72bn. Investment totals are huge with $136bn targeted for construction and building, $55bn for tourism, $9.5bn for water and electricity and $33b for industry.

Huge supply shortfall

Separately a study from Shuaa Capital and Colliers International highlighted the extremely high level of occupancy in Abu Dhabi in 2007, with a projected supply of 1,100 units compared to a demand for 21,900 units. Indeed, the same shortfall is noted for 2008, when the supply is projected at 24,000 with 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 favourable outlook in the Gulf. Rents will stay on a rising curve, while capital values will be underpinned by high and rising demand.

The only blot on the immediate horizon is surely a real estate correction in neighbouring Dubai, and a possible knock-on effect through having the same investor base. However, the enormous financial resources available in Abu Dhabi should ensure that building continues come what may and that the real estate market is firing on all cylinders by the end of the decade.

See also:
A short history of Abu Dhabi real estate: Part One