Is Abu Dhabi facing Dubai-like property slump?

Article Written By: William King

Despite stronger economic growth in year 2011, the UAE s stock market showed low 3rd quarter s earnings from all UAE real estate companies and banks. This depicts the extent to which UAE real estate market has slumped. Although, Abu Dhabi has made every effort to avoid the snares, which could affect Dubai real estate, but unfortunately none of it worked that well.

UAE states are now planning to reduce their dependence on oil and instead make real estate and tourism their main revenue generators. For this purpose, a decade long plan has been devised.

The late 2000 s recession is like a chain reaction where each piece triggers the next and sinks the effects of recession deeper in the system. Due to the economic downturn, construction and real estate projects were halted, and consequently joblessness increased. Now, after so many years of UAE s economy wandering on the sidewalk, the investors realize that the previously lucrative projects are not as profitable as they once seemed. Abu Dhabi government did not announce any amendment in its development plan yet its foreseeing Economic Vision 2030.

Few points are enumerated here to figure out if this Economic Vision 2030 has the potential to achieve the set dreams.

Majority of projects are either delayed or cancelled due to unavailability of ample liquidity. Abu Dhabi is one of the richest UAE states but still its real estate sector is much short of liquidity. Many developers are focused just to complete their existing projects be able to generate a steady income and for this purpose they had to cut down their workforce as well. There aren t enough buyers in the market and therefore several sales are postponed.

It is keen to get the best of superlatives reserved for the amenities and services offered here and thus advertise them worldwide with more conviction. The tallest tower, the biggest shopping malls, and the greatest construction projects are some of the superlative Dubai projects. Whereas, Abu Dhabi has adopted a conservative approach and is more focused at becoming a rather sophisticated destination.

With beach resorts and villas, and natural and manmade islands, Abu Dhabi presents the tourist with chic mode of fun and entertainment. Abu Dhabi was hopeful about attracting more attention but local and international investors instead preferred Dubai. Therefore, further projects could not be initiated here and the state had to wait for its right time.

Dubai Properties and Abu Dhabi Property got open for the investors in 2005; three years after the market reached its zenith. Therefore, recession effects did not appear right away and Abu Dhabi Vision 2030 was launched to entice investors. There were millions of homes and commercial properties waiting for the occupants and investors in Abu Dhabi as soon as the business closed in Dubai and people went back to their countries, the 2030 plan had lost its importance. Now we get to listen to new predictions about UAE Properties, the recent of which is that the price of property will drop further for next two years.

The news of government sinking in debt is similar to Dubai debt crisis. Therefore, the rulers and government official right now are too worried about the upcoming years to plan and monitor the Economic vision of 2030. They are looking at the growth of current property projects and rationalizing the process accordingly.

The government s perspective is to review the halted projects and complete them soon so that they can bring some improvement.

The comparison reveals many similarities in the neighbouring states. Now it is up to the authorities to learn from the circumstances faced by each other.

About the Author

William King is the director of Abu Dhabi real estate and Dubai Properties.

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This Article Has Been Published on Thu, 17 Nov 2011 and Read 136 Times

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