Abu Dhabi a 'better buy' than Dubai

Abu Dhabi is playing catch-up with Dubai, having embarked on major reforms in property ownership some three years after its sister city. But the population of the UAE capital is set to rise from 930,000 in 2007 to 1.3 million in 2013 and two million in 2020, according to new research from Strutt & Parker.

Since 2004 more than $130bn worth of real estate projects have been announced. And the figures provided by Strutt & Parker project huge growth in each major property segment in Abu Dhabi.

Office space will double to 2.7 million square metres by 2013 and rise to 4.5 million by 2020. Retail space will soar from 860,000 square metres today to 2.8 million by 2013 and 4.7 million by 2020.

Home growth

Residential units will zoom from 180,000 in 2007 to 251,000 in 2013 and 411,000 in 2020. Hotel rooms will expand from 10,000 to 21,000 in 2013 and 49,500 in 2020 with tourist numbers growing from 1.8 to 4.9 million over this period.

'There is currently a historic undersupply in all real estate sectors,' said local office director Miles Payne. 'And at the same time there is an oil boom and large sovereign wealth funds are adding liquidity to the region.'

He contrasted the lack of property in Abu Dhabi with the large supply coming up in Dubai, which Strutt & Parker estimates to be 140,000 residential units over the next 24 months, with shopping mall space tripling by 2010.

However, such is the strength of demand that Strutt & Parker does not see an oversupply in Dubai until 2012 - later than some commentators. It is just that the current strength of rental growth in Abu Dhabi that appears to have caught its attention.

Rents surge

Payne showed slides highlighting a 60% hike in rent for a two-bedroom apartment on the Airport Road between the third and fourth quarter last year; a one-bedroom apartment in Hamdan Street jumped 40%. Increases in villa rental for the same timeframe ran at between 15% and 50%; and office rents jumped by up as much as 40%.

Such rising rents and strong demand give the expansion of Abu Dhabi's real estate sector excellent fundamentals, and are likely to appeal to the kind of global institutional client that Strutt & Parker specialises in handling.

It is a very bullish sign that an international property consultancy is taking such a positive approach to Abu Dhabi real estate at this early stage in the development of the sector. But they know their clients and what they like to see in a market, and Abu Dhabi has it all.