Abu Dhabi's freehold areas 'must be extended'

Dr Shammah told AME Info that, in order to continue its development into a normally functioning real estate market, the UAE capital needed to extend the scope of areas in which expatriates could purchase property.

'You need to focus on the economics of the situation. An expat school teacher, significantly contributing to the well being and advancement of society, should be enabled to buy. It's a reality of life that he or she may not be able to afford a waterfront development. Therefore you need to expand the areas that are covered by the freehold laws,' said Dr Shammah.

'In reality Abu Dhabi does not need the restrictions, expand it so that you have a coherent development of the whole island. It should not only be a policy supporting specific developments by keeping restrictions in place.'

As well as an expansion of the areas designated for freehold purchase, Dr Shammah is convinced that in the short term, in order to foster a 'normal' real estate market, development should focus around Abu Dhabi itself, rather than on mega-projects located outside of the commutable zone.

''Greater Abu Dhabi' extending all the way to the future Khalifa Port Project is great for development, involves huge areas yet to be developed as per the Urban Planning Council's Vision 2030. On the other hand, projects in the middle of nowhere should be either cancelled or shelved for several years to come.'

New brand

Bloom Properties, which operates as the development and lifestyle arm of Abu Dhabi's National Holding, came into being last year as a rebranding of its predecessor Emirates International Real Estate, with an asset base of close to Dhs10bn.

The group focuses on projects in emerging markets, such as its 800-hectare Dounya project in Algeria, as well as Abu Dhabi, where it has a range of projects on the go. As a result, current market conditions have forced it to suspend its mixed use projects scheduled in Romania.

Market conditions have also prompted a focus on executing currently launched projects while prioritising and phasing the launch of other projects. Bloom Gardens, a 640-unit villa and low-rise apartment block development is a high priority for Bloom: 'Bloom Gardens is our first project launched for sale under the new brand. Phase one will be delivered on time, in the first half of 2011. The rest of the project will be delivered by 2012.

'I think it's important for us now to deliver on Bloom Gardens. What we've done is go back and review the prices significantly to reflect the lower construction costs. Existing buyers will benefit from the revised lower prices and payment plans. It is initiatives such as these that will support Bloom's development plans through the downturn.'

Long term market confidence

Dr Shammah believes that a combination of aggressive fiscal policy by the Government through infrastructure spending and a continuation of an accommodating monetary policy by the Central Bank will help support the real estate market, which was badly hit from a combination of the impact of the global liquidity crisis and the disappearance of speculative demand. He predicts the downturn in the Abu Dhabi real estate market will last most of 2009.

'I think the sector will bottom out this year, and the turnaround will happen at the end of the year. The market was 90% speculation, 10% end users. Now there are only end-users and long term investors. So measures [such as the draft federal residence visa law] on the legislative front in addition to increased government infrastructure spending and a more aggressive monetary policy will help reverse the outlook in the real estate sector.

'Although I have an optimistic outlook for the market in Abu Dhabi for 2010 and beyond, it is because of the Vision 2030, because of the substance, not the fluff. The economic vision of 2030 is the biggest support to the real estate sector. You don't need the government to invest in the sector, but you need it to fulfil its stated ambitions, which they are starting to do by investing in infrastructure, which includes social, educational, and cultural infrastructure. By doing this you are creating the drivers of sustainable long term development.

'For a long time real estate was looked at as a sort of 'grey gold' rush. Let the sector become a 'normal' market, playing its role in supporting other sectors of the economy. The current situation is due to the past excesses and the global crisis.'

'Everyone is learning from the current situation; developers, bankers, central bankers, buyers and speculators. I am confident that the lessons learnt will translate in the near future into a stronger real estate market and a more efficient allocation of scarce financial resources within a more diversified economy.'

See also:
Sorouh unveils new personal financing schemes
Aldar confirms affordable housing plans