AMBITIOUS: Abu Dhabi’s property plans could make or break

Some pretty darned impressive announcements from the Abu Dhabi Executive Council yesterday, including 24 new schools, 13,000 new homes, 246km of roads and 15 new overhead interchanges.

All of which is great news for the capital, as any realty observer knows, developing infrastructure is key to increasing value and yet Kipp cant help but wonder if Abu Dhabis focus might be a tad off. But before we tell you why, here a little background on the recent happenings in the Abu Dhabi real estate market according to Jones Lang LaSalles fourth quarterly report for 2011, approximately 2,700 additional residential units were delivered in the capital during Q4.

All these additional units mean the total residential stock at the end of Q4 2011 totaled to approximately 195,000 units. So far 28,000 units are scheduled to be completed in 2012, but JLL expects that many of these projects are likely to experience further delays.

Which is why, JLL marked the supply of residential stock for 2012 at 18,000 in its recently released report titled Top Trends for the UAE in 2012. It is interesting to note though that while Abu Dhabis real estate market, like Dubai, has seen a significant amount of cut backs, delays and cancellation of realty projects, it is predicted that the capital will have an aggregate supply of 237,000 residential units by 2013. Increased supply in Abu Dhabi, especially with a growing Dubaibased work population, may not look like a bad thing off the bat.

After all, it is estimated that there at least 20,000 cars commuting from Dubai to Abu Dhabi on a daily basis.

And yet we havent seen the kind of SharjahDubai or AjmanSharjah shift we saw four years back, with residents of Dubai.

WhyPart of the reason is rents and the standard of living in Abu Dhabi is still rather high.

Sure JLL predicts rents in Abu Dhabi will continue to fall all through 2012 and possibly bottom out come 2013, but consider the average rent for a prime twobedroom apartment is still Dh135,000 per year.

Rather steep. Another difference has to do with the sophisticated and more developed infrastructure of Dubai.

Even though there are still areas in Dubai that look like messy construction sites, when it comes to facilities, amenities, schools, hospitals, transport links and even social life, Dubai, for now at least has more to boast. Youll note in that last sentence, we said for now and that is contingent on the massive infrastructural undertaking Abu Dhabi has in the pipe line.

As per the announcement from the Abu Dhabi Executive council, 14 new hospitals including Mubadala Healthcares 364bed Abu Dhabi Cleveland Clinic on Sowwah Island, six specialneeds rehabilitation centres, including new autism centres, are to be built.

In addition, the council also approved an expansion of the Emirates Road between Abu Dhabi and Dubaiand lets not forget the 15 new overhead interchanges and 264km of roads commissioned. So far, so good. So where do we get off suggesting the capitals intentions maybe ever so slightly illadvised Consider the following quote from The NationalYesterdays announcement emphasised social projects targeted at Emirati citizens, including new housing developments, 14 new hospitals and 24 new schools. New homes will be built in areas such as Liwa, Nema, North Wathba and Al Hayer.

The North Wathba residential project will be one of the largest to date, covering an area of 4,178 hectares and 13,150 new homes.

The new housing schemes are in addition to 7,608 residential villas that will be completed and handed over to UAE citizens in 2012. Now, there is the rub.

Weve always commended the way the government takes care of its citizens.

And we continue to applaud this sentiment.

However, considering the rather unique percentage of the local population in the UAE, when one has an already oversupplied residential market, could developing infrastructure suited only to one demographic be classified as particularly prudentNo ones really going to be sure how this will all play out, but if you wanted to persuade those 20,000 travelling back and forth from Dubai to Abu Dhabi to take up a home in the capital, you better be able to provide them with schools for their children, and clinics for when they get sick, and a more inviting social scene.

Source: Kipp