What a different a couple of years can make in the Gulf. From a standing start the emirate of Abu Dhabi now has more than $100 billion of real estate projects in hand.
Not surprisingly interest in these development projects is huge, and the third edition of the annual Abu Dhabi Real Estate and Investment Show – which will be held at the International Exhibition Centre in Abu Dhabi from March 21-24 – is set to be the biggest yet with 6,500 square metres of exhibition space.
To date Abu Dhabi projects have been concentrated in the hands of six major local developers – Sorouh Real Estate, Aldar Properties, Al Qudra Holdings, Tamouh Investments, Al Rayan Investments and Hydra Properties, and have been large scale.
The $100 billion total includes the $40 billion Yas Island, $27 billion Saadiyat Island, $15 billion Al Raha Beach, $9 billion Danet Abu Dhabi, $8 billion Najmat Abu Dhabi, $3 billion Shams Abu Dhabi and $2 billion Capital Centre.
Population to double
Middle East real estate investment advisor RSP Group estimates that 250,000 new housing units will be required in the UAE capital to accommodate a doubling of the local population to two million over the next decade.
But building on this scale is going to require a huge mobilization of contractors and building materials at a time when the boom in neighboring Dubai has severely stretched the available capacity leading to construction delays and quality issues.
However, Abu Dhabi’s political will and financial strength is not to be underestimated. This is not a place noted for oratory or big statements. Rather there is a quiet commitment to get on with the job, and Abu Dhabi surprised everybody by getting its real estate law in place before Dubai.
There is also a depth of wealth in Abu Dhabi that is possibly unmatched by any city in the world. Ten per cent of the world’s oil, extractable at the lowest global costs and huge gas reserves; an investment fund that is rumored to be valued at $500 billion; and an oil and gas infrastructure that is both established and paid for, unlike say Qatar which is in the process of making huge investments with borrowed capital.
The emirate is also noted for its political stability and the popular regime established by Sheikh Zayed, the first president of the UAE, which is now being continued by his son Sheikh Khalifa who has gathered a strong group of young technocrats around him.
This energetic collection of young nationals is behind a new strategy for economic growth concentrating on areas where cheap energy sources provide a comparative advantage, as well as the expansion of the existing oil and gas facilities.
Given the likely continued bull market for energy due to demand from new economies like China and India, Abu Dhabi’s future looks particularly bright, and the $100 billion in new real estate projects should be seen in this context, although clearly not without challenges for those involved.
Source: AME Info