Emirate envy
A look at what’s in store for Abu Dhabi and Dubai.
The comparison between Abu Dhabi and Dubai has been a consistent source of debate over the years. With Dubai’s recent financial crisis calling for the support of its economically thriving counter-part it could easily be assumed that the competition between the two emirates was over.
However with 43% of Dubai’s 2011 budget earmarked for infrastructure, aviation and tourism developments, the city’s economy could be set for a boost of diversified industries.
Promising developments include The Lagoons; seven landscaped islands, with residential units and a retail complex to be completed in 2013; Business Bay, a new business capital with a 2016 completion date; and Al Maktoum International Airport, to be developed into the world’s largest passenger and cargo hub, by 2013.
Comparing the two market’s Wolfgang Douglas, CEO of materials supplier Timberwolf, says: “I think a lot of people talk about Dubai’s residential property market woes, but as a business we have found the last four to six months have been absolutely fantastic in Dubai.”
“All those projects have got to be completed and anyone in finishing has still got to finish it. Most of the buildings are three quarters finished, so anyone completing the projects needs to remain in Dubai,” he adds.
[facts]
90,000
Units of projects in Dubai face possible cancellation in order to prevent property values decreasing further
[/facts]
Project setbacks
The further development of Dubai’s state-ofthe-art infrastructure to support the city as a successful regional business hub and popular tourist destination has seen some severe setbacks recently. As laid out in Dubai’s Strategic Plan 2015, published in 2008, the advancement of infrastructure aims to optimise the use of land through integrated urban planning and the provision of community facilities.
Last month Marwan Ahmad Bin Galita, CEO of the Real Estate Regulatory Authority (RERA) and director of customer relations at the Dubai Land Department revealed 90,000 units of construction projects were in limbo and the subject of RERA scrutiny in an effort increase investor confidence and prevent property prices from plummeting any further.
“I think the biggest issues in the Middle East are political because when there is a good government and a safe area to invest then you will see that all the investors around the world will come to this country”
The review is also an effort to move the projects forward in a more sustainable way by assessing the contractors’ and developers’ ability to deliver work. The assessment also takes into account developers’ reputation and experience of dealing with fraudulent partners, a factor that will reassure prospective investors.
Commenting on the attraction of more investors to the UAE Imad ElAsaad project manager at Chemipaint Universal Paint and Chemical Industries, says: “I think the biggest issues in the Middle East are political. When you have a good government and a safe area to invest, then you will see that all the investors around the world will come to this country.”
New tenancy regulations
A new procedure called the online Tawtheeq system specifies that all tenancy contracts to be registered has recently been introduced to Abu Dhabi’s real estate sector.
Regulations require all property owners and appointed property management companies dealing with lettings to comply by September 1 2011. The legislation aims to provide the clarity, transparency and stability to reassure and attract investors back to Abu Dhabi.
“Property owners and companies have already started coming to us for advice on how to approach the new system and we have been able to show them the benefits and advantages it brings,” says Duncan Pickering, partner of DLA Piper Middle East’s real estate team.
While property law enforcement is a crucial strength for Abu Dhabi’s complex clearance procedures from government departments, the Civil Defence and Abu Dhabi Municipalities can delay projects. Although handover of Marina Square, a community lifestyle on Reem Island was due to take place early last year Tamouh, the primary developer of the project only received completion certificates for four of the 13 expected residential towers, this year.
Procedures will be detailed, with owners and appointed property management companies being required to open accounts and register the specifics of all leasable buildings and individual tenancy contracts. Parties will however still be free to negotiate the terms of the agreements according to the Tawtheeq’s standard, under special conditions requiring prior approval which can take up to five days.
“We have also pointed out that if owners or appointed property management companies do not comply, the potential disruption it could bring to their tenants is severe,” Pickering adds.
Even within the perimeters of property law Abu Dhabi’s security is still considered strong. “Most of the investors around the world are coming to Abu Dhabi because they feel safer.
Not only in Abu Dhabi, but in the whole UAE. This is a huge issue in the east; politics aside Abu Dhabi is a safe place to invest and when there is security, there is money.” ElAsaad says.
[facts]
200,000
Projected occupancy for Abu Dhabi’s Reem Island resort
[/facts]
Abu Dhabi
In terms of development Abu Dhabi is still at an early development stage meaning it is in the same position Dubai was in six years ago. With major propositions laid out and published in the Urban Structure Framework Plan in 2008.
The strategy set out to deal with urban struc- ture, environmental framework, land use framework, transportation framework, public open space framework and the capital city framework with the focal areas of the new Central Business District (CBD) and surround- ing islands, the Capital District at a key cross- road on the mainland, and the Grand Mosque.
One major development incorporated in the document is Reem Island, a combination of an urban metropolis and holiday resort to include purpose-built spaces for business, commercial and residential areas close to the capital’s downtown area. According to the scheme, the building will be fully completed in 2023 when the land is expected to house 200,000 residents.
“I think a lot of people talk about Dubai’s residential property but as a business the last four to six months have been absolutely fantastic in Dubai”
“Abu Dhabi is an area that is being significantly invested in and a lot of it is government driven. The thing with Abu Dhabi is if you look back traditionally it was a market that existed as the capital of the federation of the UAE so it’s got all the government departments here and it’s also the centre for the oil and gas industry and that was its main function,” says CBRE’s Mark Morris Jones, MRICS director in the agency division.
“They are now expanding and trying to diversify. They want to bring in the banking and financial services and commodities and brokerage. It’s going to be the centre of the stock market.
[facts]
Project Dubai
- The Lagoons: completion 2013
- Business Bay: completion 2016
- Al Maktoum International Airport: completion 2013
Abu Dhabi
- Reem Island: completion 2023
- Khalifa City: completion 2030
- Yas Island: completion 2014
- Saadiyat Island: completion 2018
[/facts]
“Abu Dhabi’s basic industries are also being invested in, including Abu Dhabi basic industries, ICAD the industrial city of Abu Dhabi and the big one is KIZAD, the Khalifa Industrial Zone Abu Dhabi, up towards the Dubai Border,” he adds.
The decision of government officials to focus investments on infrastructure may have placed Abu Dhabi in a position to draw touristic attention away from future World Cup host, Qatar. The country recently announced the allocation of US $125 billion to be spent on development projects over the next five years, including a $27 billion investment in residential and commercial construction projects.
“I think Abu Dhabi is the key area for investment, more so than Qatar. I know people are raving about Doha but Doha is still a decade away. The city’s government officials have got a lot of optimism about what they want to do but they are not actually yet deciding to do much,” Douglas concludes.
