Property buyers face lengthy but profitable wait

That is provided, of course, there are no construction delays. For the delivery of apartments in Abu Dhabi is several years behind neighbouring Dubai for one simple reason: legislation to allow sales to foreigners came three years later, and the formation of the giant development companies only happened two-and-a-half years ago.

In fact, given the scale of the undertaking - with huge mega projects like Al Raha Beach, Reem Island, and Yas Island - developments have been moving ahead at a rapid speed, by global and certainly by local standards.

For example, Sorouh Real Estate has recently highlighted the on-schedule programme for its landmark 300-metre high Sky Tower, part of the Gate district in Shams Abu Dhabi on Reem Island.

Sky Tower progress

It was launched in April 2006 and to date the concrete of the three basements have been fully completed and the first floor slab. The core walls up to level four of the tower have also been completed with placement of steel reinforcement between levels four and five.

Mounir D. Haidar, Sorouh Real Estate CEO, commented: 'When we launched Sorouh two years ago, we promised timely delivery of our developments. Sky Tower's development to date is a clear sign of our determination to keep our promise.'

Last month Sorouh announced that it is extending freehold opportunities for all nationalities at the Sky Tower which looks set to achieve iconic status in the UAE capital. At the same time, rival Aldar Properties has $60bn in projects now underway.

The delivery of the $630m Al Raha Gardens project this autumn for UAE nationals only is, however, a reflection of the much shorter time taken to construct villas than apartment towers.

2009 for apartments

That means that the first delivery of apartments from Aldar may, realistically, not take place until towards the end of 2009; another developer is promising apartments this time next year which may be an over-ambitious timetable.

Off plan sales are proceeding well now on developments in Abu Dhabi, after a hesitant start. Buyers are clearly paying attention to the real progress now being made by the principal developers and the mobilisation of the big sites.

Off-plan selling prices have been benchmarked against neighbouring Dubai, but still look very cheap by comparison to other global cities. Indeed, Abu Dhabi was ranked by HSBC as having some of the cheapest real estate in the world by comparison to GDP per capita in a survey this autumn.

Inflation

Therefore, the chances must be that with local inflation rates soaring and oil prices very bouyant that off-plan buyers will achieve their traditional healthy premium when their completed property is handed over.

This may not be a repeat of the Dubai experience three years ago. But do not be so sure, the undersupply of property in the UAE capital will be greater than ever by then, and holding the keys of completed property could be a very attractive proposition.

See also:
Take the long view of Abu Dhabi property
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