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

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

Abu Dhabi’s infrastructural changes and developments are just super, but Eva Fernandes can’t help but wonder if Abu Dhabi’s focus might be a tad off in some regards.

January 24, 2012 4:14 by

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 can’t help but wonder if Abu Dhabi’s 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 LaSalle’s 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 Dhabi’s 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 Dubai-based 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 haven’t seen the kind of Sharjah-Dubai or Ajman-Sharjah shift we saw four years back, with residents of Dubai. Why?

Part 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 two-bedroom 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.

You’ll 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 Healthcare’s 364-bed Abu Dhabi Cleveland Clinic on Sowwah Island, six special-needs 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 Dubai—and let’s not forget the 15 new overhead interchanges and 264km of roads commissioned.

So far, so good.

So where do we get off suggesting the capital’s intentions maybe ever so slightly ill-advised? Consider the following quote from The National:

Yesterday’s 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. We’ve 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 prudent?

No one’s 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.

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  1. MK on January 25, 2012 11:46 am

    With regards to your last paragraph…I have to say that still for some, the daily commute is much better than living in a AUH and its lack of a proper infrastructure.

  2. TB on February 1, 2012 7:11 am

    Lack of Proper infrastructure? I assume that’s an emotional response. I need to only mention JLT scenic tour set up as a beginning to the whoas of Dubai living. How about the 10 dirham starting for taxis, how about hospitals which most people can’t afford? how about private schools with fee hikes? I’ll contrast this effort with the recent opening of Salam Street tunnels, as well as 3 major arteries into the city center, as well as 2 brand new bridges which cut travel time for you “posh” Dubians. Need I mention the 5% service charge ontop of your rent payable to DEWA, which has bills that are insane (average 3 bedroom apartment in Abu Dhabi has a charge of 175AED to ADWEA) as well as your wear and tear on your vehicle, petrol expense, salik, tires, brakes, time away from your family. The list goes on. Abu Dhabi is more than just tourist club, and this isn’t common knowledge in Dubai. I have 3 major parks within walking, yes walking distance of my home, which has sidwalks! OMG, sidewalks and a community in which I interact with UAE Nationals as peers, not enemies in 4x4s. It’s so much cheaper and hassle free to live in Abu Dhabi. Oh and as for nightlife, you mean 8 nightclubs and 5 new hotels isn’t enough nightlife for you. How about concerts, Abu Dhabi Golf Championship, then England Pakistan test match, then AD Tennis and on and on. I will argue that ADproviese superior quality of life to Dubai, yet much less prestigious to brag about to your friends back home. PS. It takes me 15 mins to work in the morning and I have lived in Dubai some 2.5 years before my move to AD in 2008.


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