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?
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.
Legislation
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.