As the capital of the United Arab Emirates, Abu Dhabi is a rapidly growing and diversifying city. The city’s appeal draws business and tourists alike, and the population continues to grow every year. In terms of progress, Abu Dhabi has a very considered approach to growth with a strictly enforced development programme that will run until 2030. Every facet of the city has been carefully planned to ensure it is as diverse, efficient and sustainable as possible.
“With the global credit crisis causing uncertainty across much of the real estate industry, investors are naturally cautious about where to focus,” says Rohan Marwaha, managing director of the Cityscape series of real estate and development events in emerging markets across the globe.
“Abu Dhabi, however, with multibillion dollar long-term plans for continued infrastructure development is providing the world with remarkable opportunities that simply do not exist elsewhere,” adds Mr Marwaha. “What is becoming clear in the new global economic climate is that Abu Dhabi, is fast establishing itself as a beacon of cultural renaissance as well as a focus for futuristic, sustainable residential and commercial habitats.”
On the sustainability front, Abu Dhabi is masterplanning the world’s first zero-carbon city. Known as Masdar City, the pioneering development will eventually house about 40,000 people.
Furthermore, there are plans for a second ‘Eden’ project, to twin the pioneer in Cornwall, UK, this time on Saadiyat Island. This conservation tourist attraction will incorporate low-carbon villages. Abu Dhabi’s cultural focus is also centred on the Saadiyat Island development, which includes the first branch of the Louvre outside of Paris and the world’s largest Guggenheim Museum.
Saadiyat Island’s cultural district is one of the emirate’s planned anchor tourism attractions and is expected to attract 1.5 million visitors a year once completed in 2018, and will be home to about160,000 people. According to Landmark Advisory, freehold and leasehold property prices in Abu Dhabi soared in 2008, especially after Cityscape Abu Dhabi in May.
Over the course of 2008, average villa prices increased by 80%, which is significantly higher than the 55% growth in average apartment prices.
Figures show that after the spike, average apartment and villa prices stabilised during Q3 of 2008 and then started to fall in Q4. The downward trend has continued into mid-Q1 2009, however this is a global phenomenon and not peculiar to Abu Dhabi or the Middle East region.
Despite the current decline, many industry observers, including Mr Marwaha, believe that Abu Dhabi’s property market remains strong.
“You have to compare Abu Dhabi to other international cities in terms of the extent to which they are on the radars of institutional investors and high-net-worth individuals,” says Mr Marwaha. He adds: “Abu Dhabi still is a very strong proposition and has a lot of growth to go through.”
Developers are beginning to delay, phase, and/or restructure projects, which will constrict supply pipelines and take pressure of an inflated market.
The latest Property Insight report from CB Richard Ellis predicts that the economic situation will present opportunities for developers and end users. Developers will become more cautious and only pursue well-planned, quality projects. End users will benefit from a better-quality product.
Among the strong fundamentals of Abu Dhabi’s market is the high probability of residential undersupply.
The CB Richard Ellis report concludes that although 2009 will be challenging for the real estate sector, the market remains “significantly undersupplied” across almost all sectors and so offers an environment for growth.
Cityscape Abu Dhabi 2009 takes place from April 19-22 at the Abu Dhabi National Exhibition Centre.