"Encouragingly, industry seems to be getting the attention it deserves. While it isn't attractive property, it's the backbone of economies around the world and shouldn't be ignored," emphasises Steven Morgan, who oversees Cluttons' Abu Dhabi operations. Cluttons has set up a specialised consulting team to focus on real estate related logistics operations within the industrial sector.
Morgan is not alone in believing this is one of the routes Abu Dhabi should be exploring. His sentiments find resonance with Gurjit Singh, chief operating officer of Sorouh. "In my opinion, one should focus on creating logistics and small manufacturing premises," says Singh. "A lot of money is being pumped into large projects and they will require small and medium sized enterprises (SMEs) as support services."
He substantiates his opinion by citing Abu Dhabi's plans to create a railway network, light transit and nuclear power plants, with the latter alone expected to generate 25,000 jobs. "Job creation in Abu Dhabi drives its real estate, that's where the demand comes from," Singh assures.
Tasweek's Masood Al Awar also reckons logistics and transport will assume long-term significance in creating future demand for industrial real estate, though he sees overwhelming potential in health care as well.
"Due diligence is very important now, we will invest into the health care sector in Abu Dhabi as the requirement is huge," Al Awar adds.
Other growth areas would be those that support the newly created residential communities, such as retail and education. Abu Dhabi forecasts its population to rise to around five million by 2030. Whether this figure will hold or not is secondary, believes Aldar's CEO, John Bullough.
"It's probably a slower growth rate now, but we still got the fundamentals," says Bullough. "The point is to work on the infrastructure and create real places that set the city apart."
While that may be so, an immediate pressing need is to create a regulatory environment to support the same. "We need to face up to reality, be transparent so we all know what's going on and work together," Bullough remarks.
"Abu Dhabi needs, on a global and local level, to build quality infrastructure and be transparent about the way everything is done to prove that its a maturing market," he adds.
Investors would welcome any move that secures the rights of their investments. Any progress on the regulatory front will also have a bearing in shoring up business confidence and by extension, on the real estate sector itself.
"There is concern about loans being repaid, the strata law and service charges," says Investment Boutique's CEO, Heather Wipperman Amiji. "When rents drop but service charges stay the same, income drops. Investors in Dubai learnt some hard lessons in this regard, and market watchers are looking to Abu Dhabi to see how it is going to handlethe matter."
Tara Marlow, head of property and hospitality - Abu Dhabi, at Al Tamimi & Company law firm, believes that the capital will have its hands full this year.
"Abu Dhabi needs to focus on finding the gaps within the legislation and making all the pieces hang together so it works," she says. "We're still waiting for answers on pre-registration legislation to create investor and lender protection. To rebuild confidence we need transparency and stability."
There is some progress in respect to ownership and registration. A federal draft law organising ownership and registration of real estate across the country is said to be under preparation.
What's happening for now, explains Marlow, is that the authorities in Abu Dhabi are working on the technical side of the registration process. But it can't register anything until a strata law is in place. So it simply issues the title deeds to the master-developer, not sub-developers or investors.
"The title really needs to start being passed down, if not investors have no ground to stand on unless they have good documentation of their purchases," Tara cautions. "The lender also has no guarantees whatsoever."
Marlow calls upon master-developers to issue comprehensive documents and keep their own register to act as a guarantor to lenders as well.
"It is in their interest as the master-developer's brand gets diluted by failing sub-developers," Marlow says.
Linking to a construction schedule
"Legal matters right now are purely contractual. The investor can only fall back on the Civil Code. To file a case, his documents need to clearly link the development to a construction schedule and prove that there is an anticipated breach of contract because there is no way that the development will be completed. It is hard to push through and win on it though."
Tara Marlow of Al Tamimi & Company
