Abu Dhabi Real Estate

The city started to plan in the 1970’s where it was mainly covered with Nomadic settlers and deserty regions.

The population at the time was approximately 600’000. One of the biggest problems with Abu Dhabi is that the streets have no name and there is no direct door to door postal system. Mails are sent to local post offices with PO Boxes rather than peoples houses. There is no public transportation which means that commuters have to rely on taxis and other methods. When describing where they want to commute to they often have to a region or a landmark or significant building as the destination. The government is however planning a metro and a bus system to resolve these issues. Furthermore as of last year the government has demolished many of the old buildings to replace them with skyscrapers and other modern structures. In terms of how the region is currently, Abu Dhabi is a much more modern city with many parks boulevards and busy shops.
  

    There is no doubt however that despite the lack of city planning there is huge demand for living space in the region. There is a much higher demand for  accommodation than supply available, which results in annual rent inflation figures to exceed 20% (although economic inflation has been slightly higher at 10% last year).This makes accommodation and office space very hard to find. During one week in early 2007 there has been a demand for 21’900 units and a supply of only 1100 units according to Dubai based real estate researchers. Most of these analysts expect landlords to be in the bargaining power for the next to years as supply lagges demand. One analyst expects demand to rise 10-15% over the next few years compared to the 30-40% rise in demand.  

    To mitigate this problem the Abu Dhabi Chamber of Commerce will invest around 140 bn USD in real estate and construction over the next few years to narrow this mismatch between demand and supply.   By 2009 an expected 150000 new units are expected to be built some with extendable 99 year leaseholds. Abu Dhabi Material City was established in 2006 to bolster the role of the construction sector.

   Although the demand frenzy has not reached that of Dubai’s, many analysts are expecting Abu Dhabi to catch up with it’s more dynamic neighbor especially following many of the cultural and tourist attraction that are being built. Abu Dhabi does have some challenges in increasing its supply of accommodation, namely shortages in raw material for construction purposes, a lack of skilled labor force like architects and civil engineers as well as human rights groups monitoring the regions labor violations. The lack of city planning is also a challenge that will slowly overcome once transportation lines will improve.