Dubai, Abu Dhabi for realty synergy

Abu Dhabi: The borders between Abu Dhabi and Dubai are getting thinner physically and this synergy is being reflected in the business sector and development projects, speakers participating in a panel discussion in Abu Dhabi observed Tuesday.

“I have worked with many property companies and noticed the synergy between the two emirates,” Masoud Al Awar, chief executive of Tasweek Real Estate Development and Marketing, noted at the meeting organised by Cityscape Connect, an exhibition and conference organiser.

The integration between the two emirates is proceeding at a fast clip, he said. About 15 to 20 years ago, the border between Dubai and Sharjah was clearly demarcated and so was the case between Abu Dhabi and Dubai but the physical demarcation was no longer apparent, he said.

Al Awar said the fall in property prices in Dubai created greater pressure in the Abu Dhabi market which still experiences a huge gap between demand and supply. However, he said, the property market would not remain weighed down for long.

Four key factors — quality, amenities, services and value for money — will decide the price and rent of individual properties, he said.

Price correction

This would ensure that the prices and rents of properties in prime locations or those having good amenities and services would not fall, although rents in Abu Dhabi in general had softened to an extent, Al Awar said.

The Abu Dhabi rental market was stabilising, he noted. Rents would have to go down a little, but the correction would not be anywhere close to the 40 to 50 per cent drop which some people had predicted, he said.

Citing the integration of the Dubai and Abu Dhabi property markets, Heather Wipperman Amiji, CEO of Investment Boutique, said migration of populations between the two emirates was growing. The opening of the Shaikh Khalifa Highway through Saadiyat and Yas Islands last year had facilitated this trend, she said.

Instances of Abu Dhabi companies opting to keep their workers in accommodations in Dubai [due to low rents] and the increasing number of people commuting daily between the two emirates were examples of this migration, she explained.

Amiji said investors could expect between 7 to 11 per cent returns from the property market in Abu Dhabi.

Echoing the same sentiments, Al Awar said the trend of looking for unreasonable margins of up to 40 per cent had passed.

The panelists said delivery of 4,000 freehold residential property units this year in Abu Dhabi would be a challenge to the market.

* 4,000 freehold residential properties to be delivered in Abu Dhabi in 2010
* 25,000 workers expected to join nuclear power projects
* 7-11 per cent returns expected from Abu Dhabi real estate investments

Huge investments by the government in infrastructure projects in Abu Dhabi will create jobs which in turn will create demand for residential and commercial properties, said Gurjith Singh, chief operating officer of Sorouh.

He cited the rail network project and nuclear power projects as prime examples. “Nuclear power projects alone will attract 25,000 people who will need residential units,” he said.

Figures

* 4000 freehold residential properties to deliver tin 2010
* 25,000 people will join nuclear power projects
* 7- 11 per cent returns expected from real estate investments

By Binsal Abdul Kader, Gulf news