Should You Invest?
Abu Dhabi is currently being touted as the preferable investment
option when it comes to looking at the UAE. Like Dubai, Abu Dhabi
is a tax haven and the recent laws allowing foreigners to purchase
property leaseholds combine to make the city an attractive
prospect. With a property market that is less developed than that
of Dubai and with more affordable prices, there is much potential
within the city from which investors could profit. It is estimated
that price increases for residential properties could continue at
20% - 25% for the rest of 2008, dropping slightly to 15%-20% in
2009. Demand for residential property currently exceeds supply and
is unlikely to drop. Learning from the mistakes of its neighbour,
Dubai, the authorities of Abu Dhabi are keen to limit
overdevelopment, instead creating slower, more sustainable
growth.
- Strong demand for real estate and a growing population.
- High demand currently not being met by supply.
- Tax haven
- Occupying an earlier stage in it development cycle therefore
much potential remaining in the market
- High price increases still expected
- The richest city in the world, sitting on almost one tenth of
the world's oil.
Price History
Since Abu Dhabi's property law came into effect in 2005 the real
estate market has really taken off. Prior to the introduction of
the law even locals were unable to purchase property whereas
now, both investors and home buyers can purchase. Prior to
2005 all land was owned by the Crown Prince and exchanges of land
had to be authorised by him. Slowly the authorities realised that
they would not be able to attract any foreign investment if
foreigners were unable to buy land in the emirate. The property
laws were therefore altered radically and changed to allow
individuals to buy and own property. The first real estate company
to open saw oversubscription by 450%, lines of people queuing
overnight and the property units sell out in 45 minutes. Whereas
Dubai had to sell initial developments at low prices to kick start
the market, Abu Dhabi has not had to resort to such efforts as the
demand was already in existence and people had the funds to buy as
Abu Dhabi is the world's richest city.
Whereas Dubai is happy to concentrate on courting the Western
dollar, Abu Dhabi is much more concerned with creating a property
market for national Arab people. Development is orientated to
create a lasting cultural attraction that would be more reliable if
a disaster affecting the international tourism market was to strike
and put a halt to Western visitors/invetors. Development is also
slower and more considered. As a result there is still a shortage
of housing. Demand is very high but supply is not yet catching up
with it. According to the globalpropertyguide.com, only 1,100
high-end units will appear on the market in 2007 whilst demand for
22,000 units is estimated. As a result prices are still expected to
rise into the beginning of 2009.
Top