Abu Dhabi off-plan sales brisk at Cityscape

Sorouh Real Estate's the Shams Abu Dhabi mega project continues to attract the attention of buyers with its stunning array of towers at The Gate and the landmark Sky Tower.

Over at Aldar Properties the release of more property in the 10km long Al Raha Beach development again had Cityscape visitors reaching for their cheque books. A waterfront location near to the Abu Dhabi airport, a planned community with top-quality design and just over an hour's drive from New Dubai, are major selling points.

A new study from the Abu Dhabi Chamber of Commerce totaled projects now proposed or planned or under construction at $327bn in the UAE capital.

Delivering dreams

But after their experience in neighboring Dubai, investors now treat such information with a degree of skepticism. After all, property is a down-to-earth question of what can I buy for immediate occupation, not what are your dreams for tomorrow.

However, the major and minor developers of Abu Dhabi are now mobilising for a truly epic construction task to transform the city from its 1970s time-capsule into a 21st century Arabian paradise.

These are days of amazing levels of income for Abu Dhabi with oil past the 1980 inflation-adjusted high at almost $90-a-barrel. For while Abu Dhabi may have been slow to invest in architecture in the past decade, its oil production facilities have expanded and developed to meet increasing demand.

The city's sovereign wealth funds have also wisely invested past oil revenues over four decades to the extent that this vast pool of overseas investments can rival oil revenues as a source of income, let alone as a capital reserve.

Reality check

Hence, Abu Dhabi will have no shortage of cash in realising its development dreams, and any fears of a local credit crunch can be dismissed. Rather it is that so much money is available that the tendency can be to go for mega projects so big that the delivery dates are so far into the future that they hardly matter to investors today.

But the reality of the Abu Dhabi market will surely be that as in neighboring Dubai the premium paid on completed property will soar before the dreams of the future arrive. Thus off-plan buyers of today could well end up the Abu Dhabi property millionaires of the future.

Perhaps as in Dubai the best gains will come from picking the best locations and property that can be rented to the affordable, mass segment rather than the super-rich. For the real rate-of-return on a modest property can exceed that of a premium unit and this fact has been demonstrated in many markets around the world.

See also:
Special Report: Buying Property in the UAE
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Abu Dhabi real estate among the cheapest in the world