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What lessons for Abu Dhabi from the Dubai real estate boom?

This weekend will see the ground breaking ceremony for Sorouh's 83-storey Sky Tower, part of The Gate project in Abu Dhabi. More than $100 billion worth of new real estate projects are now underway in the UAE capital. But will Abu Dhabi learn from the experience of neighboring Dubai in managing this boom?

United Arab Emirates: Monday, July 17 - 2006 at 08:55 Courtesy: AME Info

Abu Dhabi now has half-a-dozen real estate companies, all formed within the past two years, that are spearheading the transformation of the UAE capital into a modern Arabian metropolis.

To some extent time stood still in the previous decade with a moratorium on construction. This created pent-up demand and put upward pressure on rentals which has only become more acute with the oil boom of the 2000s. The change of leadership was the catalyst that led to a change of policy and the creation of the new real estate companies as investment vehicles.

It is no surprise that Abu Dhabi's new property companies have studied the experience of neighboring Dubai, both to learn best practice and hopefully how to do things better. Dubai legalized freehold ownership for foreigners three years ago, although its main property companies date from the late 1990s.


One plus for Abu Dhabi has been the immediate clarification of the legal position regarding ownership for foreigners and nationals well in advance of starting construction projects. There are 99-year leases for expatriates and freehold tenure for UAE nationals.

In terms of the phased release of projects, this has followed the Dubai pattern with demand generally greatly exceeding the supply of property on the day. This has created market awareness and a feeling that some property may be under priced.

Abu Dhabi has also gone for very large development projects from Day One just like Dubai. This is partly a matter of prestige but there is the danger that Abu Dhabi might suffer the time and cost over-runs which are typical of large construction projects all over the world and which buyers have found annoying in Dubai.

It is to be hoped that the development companies will learn from this particular experience and plan accordingly. Certainly senior managers who talked to AME Info had this matter uppermost in their minds and have engaged some of the world's finest construction managers, so it may be different in Abu Dhabi.

This leads to the issue of quality of construction which is a part of the same problem. Building large projects can lead to a skimping on quality. But this does not have to be the case. Visit the Emirates Palace Hotel in Abu Dhabi to see a building of awesome quality of finish and it only opened a year ago.

Media message

Perhaps where Dubai can best show Abu Dhabi a lesson is in marketing and public relations. The Dubai property companies have done a superb job in getting their message reported around the globe on television, the Internet, newspapers and magazines thanks mainly to the excellence of the media sector in Dubai.

Abu Dhabi property companies are going to have to come to Dubai on a regular basis for press conferences if they want to get their message correctly reported. For it is a fact of life that the media hub of the UAE is in Dubai and senior reporters, particularly from international media, do not have the time to constantly travel to Abu Dhabi and will not do so.

The impact of such exposure on Dubai has been enormous. Visit Germany and everybody has heard of The Palm, Jumeirah and the Burj Al Arab. And if Abu Dhabi wants its developments to become as famous - and this is how to sell real estate to foreigners - then the Dubai media machine is available close at hand.



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