Abu Dhabi's improving economy is encouraging potential investors
Construction and property industry exhibitions in the GCC generally tend to be a good, if somewhat unscientific, measure of how regional economies are doing.
So here we come to Cityscape Abu Dhabi, set to kick-off for three days from Tuesday. I can distinctly remember the first Cityscape I was briefed about in 2012.
I remember being told by a colleague how it was going to be a lot smaller this year and not to expect too much in the way of breaking news. To be fair, this was a pretty accurate summation of the event.
However, this time around, there is a sense that regional economies are on the up and that this will be reflected in the number of new projects announced at the event. In many ways, the timing is good for Abu Dhabi. With the second quarter of the year only three weeks old, it gives the UAE capital the chance to lead from the front.
Too often, you get the feeling that the Emirate is overshadowed by its neighbour Dubai, but this year Abu Dhabi has reasons of its own to be positive.
The latest official government figures show its GDP reached $260bn (AED953bn) in 2013, around 4.8% higher than last year’s performance. Moreover, non-oil GDP growth accounted for 45% of the national accounts.
The expectation from property consultants and developers that I have spoken with in the run-up to this year’s event is to expect big things at Cityscape. Mixed-use residential projects seem an obvious area where we can expect new developments. The simple fact of the matter is that Abu Dhabi needs more houses to cater for a growing population.
Abu Dhabi Urban Planning Council (UPC), the Emirate’s strategic masterplanning authority, puts the existing population at roughly 1,495,000 and expects this to grow to 2,471,000 by 2030. It says it is planning for an additional 166,000 dwellings by 2030 to accommodate this growth both in existing and new communities. It’s not hard to see the opportunities for private investors and real estate firms, especially in areas such as Reem Island, Saadiyat Island and Al Raha Beach where foreigners are allowed to buy property.
It wasn’t so long ago that local contractor Arabtec was announcing that it would be building nine mixed-use towers at developer Tomouh’s City of Lights project in Reem Island. It’s no secret that work has slowed at City of Lights for several reasons, but this type of news is another welcome sign that investment is starting to flow again.
Indeed, propertyfinder.ae lists Reem Island as the most searched-for community to buy property in Abu Dhabi. But this wouldn’t be the GCC if there weren’t some concerns expressed about unbalanced levels of supply and demand, especially when it comes to real estate. What will happen if everyone builds at the same time is just one of the doubts I’ve heard mentioned.
Encouragingly, the federal Government is listening; with moves such as introducing a rental index – expected this year – designed to ensure that the Emirate’s recovery is both properly managed and sustainable.