Abu Dhabi Property Investment

Country:  Abu Dhabi

Within the next three years, at least five major luxury hotels will be opened alongside five championship golf courses and several marinas, all overlooked by sumptuous villas and spacious luxury apartments. On top of this, between 2,000 and 3,000 additional hotel bedrooms are due to be added to the existing 10,000 rooms in the UAE capital every year for the next five years. Property developments in Abu Dhabi valued in excess of a whopping £7 billion are set to be announced over the next two years.

The capital of the UAE and the largest (by some distance) of the seven emirates, Abu Dhabi produces 90 per cent of the region's oil; currently it possesses ten per cent of the world's remaining oil reserves and five per cent of the planet's natural gas. Funding of such ambitious construction and development projects, therefore, is unlikely to be a problem for its rulers.

In March 2007, Fortune magazine labelled the emirate as "the richest city in the world". And according to some sources, Abu Dhabi enjoys the highest per capita income in the world, with 2005 seeing a growth in GDP of 11 per cent.
With a population of just 1.6 million, of which up to 80 per cent are expatriates, and large oil reserves, it is easy to see how income trumps anywhere else.

Although it has been difficult in the past for foreigners to purchase Abu Dhabi property, recent changes in property laws have opened up investment opportunities for non-UAE nationals residents to purchase villas and luxury apartments in prime locations. Ownership by foreigners is now available on 99-year lease and land title agreements. Such reform has allowed for even greater growth in Abu Dhabi's fast-developing real estate sector.

But just making it easier to purchase there isn't the only thing drawing investors. While Dubai has fast become the building site of the UAE, filled with gaudy constructions and equally gaudy people, Abu Dhabi has approached the development game in a much more measured fashion. This is not to say that it isn't building on a phenomenal scale, much like its near neighbour, but that it is seemingly doing so with a little more thought.

As a late starter into Gulf tourism, Abu Dhabi has learned a number of important lessons from Dubai. Keen to avoid the pitfalls of rapid development, such as overloaded infrastructure and increased crime, Abu Dhabi has marketed itself from the outset as the cultural hub of the Middle East. Built more on traditional Arab and family values, it has been keen to attract interest from the top end of the market and the more discerning buyer, cherry picking its partners from among the world's top architects, designers, construction groups and leading hotel management companies. Prestige brand names have been quick to secure retail space within several highly ambitious tourism and residential projects.

Abu Dhabi also has a number of natural attractions that are boosting its quest to be the next big tourist, business and investment centre of the Middle East. Its sandy coastline in the Arabian Gulf is dotted with more than 200 offshore islands, creating an attractive base for sailing, diving and deep-sea fishing, and the emirate boasts a sub-tropical climate with sunny, blue skies the norm and rainfall infrequent. The best months to visit are undoubtedly during the cooler winter months (November to March), when temperatures average a pleasant 24 degrees Celsius in the daytime and 13 degrees Celsius at night. Temperatures during July and August, however, often exceed 40 degrees Celsius. Despite the temperatures, Abu Dhabi is one of the greenest cities in the region, with gardens, parks and boulevards aplenty and a championship golf course that hosts the European PGA Tour every January. 

This green status is certainly one it wishes to maintain, and a projected 40 million palm trees are to be planted across a range of new island developments that will be links to a newly expanded international airport by a ten-lane highway. The airport will have a capacity for up to 20 million passengers annually by 2010. Etihad Airways, the fast-expanding national airline, is promoting and partnering a number of the new developments.

Plots are becoming available on Saadiyat Island, close to the city centre, which has covers 27 square kilometres - about half the size of Bermuda - with 19 kilometres of beachfront. Plans for Saadiyat include 8,000 villas, 38,000 apartments, 29 hotels, three marinas and two golf courses, all in seven unique districts. It is set to provide homes for 150,000 residents.

In keeping with Abu Dhabi's bid to be a cultural centre, a focal point of Saadiyat will be a Frank Gehry-designed 30,000-square-metre Guggenheim museum (the largest Guggenheim in the world), devoted to modern and contemporary art, and a state of the art concert hall. Saadiyat is being developed by Abu Dhabi's Tourism Development and Investment Company (TDIC).

Elsewhere in the emirate, Aldar Properties is building to a grand scale. The Al Raha Beach development, the first in Abu Dhabi to be available to foreigners to purchase, will, when completed, serve as a new gateway satellite city and resort development for Abu Dhabi, accommodating up to 120,000 residents across eleven residential and commercial precincts. Spread over 500 hectares on the beach-side of the main highway connecting Abu Dhabi and Dubai, Al Raha Beach is set to include 60-storey apartment blocks, low-rise developments and individual villas as well as hotels, marinas, parks, shops, entertainment and cultural facilities and restaurants, all linked by a series of canals and bridges.

Prices have been released for the Al Bandar district of Al Raha Beach, which start from £100,000 for one-bedroom apartments of 75 square metres. Two-bedroom units up to 100 square metres are priced from £140,000 to £350,000 and three-bedroom apartments from £282,000 to £500,000.

Prices have also been released for the adjacent Al Muneera Towers building in the Kohr Al Raha district, with one-bedroom, 76-square-metre units selling from £107,000 up to £140,000. Two-bedroom, 134-square-metre apartments start from £177,000, with three-bedroom, 156-square-metre properties from £203,000 and four bedroom homes from £274,000.

Abu Dhabi's biggest attraction, however, is likely to be Yas Island, located just ten minutes' drive from the airport and around 30 minutes' from the city centre.
It is Aldar's flagship development, covering 2,500 hectares, and features three new golf courses, beach clubs, hotels, an equestrian centre and a huge shopping complex, anchored by world-renowned department stores and upscale boutiques.

Central to all this will be a Ferrari theme park and a Formula 1 racetrack, modelled on the concept of Monte Carlo, that will wind its way through a series of newly created residential villages and marinas. The theme park will feature 24 attractions including roller coasters, go-carts, dune buggies and an 18-screen theatre complex. Other attractions will include a Ferrari driving school and a Cirque de Soleil theatre complex.

Sales of residential properties on Yas are due to be released soon, with completion dates set for September 2009. These will include a range of low-rise apartments and villas, based on original architectural features that will blend the region's traditions with contemporary styles. Locations will include waterfront units overlooking the lagoons, townhouses on the golf courses and duplex homes on the marinas.

Naturally, as an investor, you may fear, with all these developments completing at similar times, that there will be a saturation of rental properties on the market, pushing prices and potential yields downwards. Although this has happened to some extent in Dubai, forecasts for Abu Dhabi look pleasing. With a chronic housing shortage already occurring, occupancy levels in both residential and commercial premises running at nearly 100 per cent, rents currently rising up to 50 per cent a year, as well as a population projected to reach around double its current level by 2015, the large-scale development certainly looks set to fill a widening hole in the market. Time to get your dirhams ready.

First published in September 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.