Although many had hoped this region would be insulated against the worst of the global economic downturn, it seems it has not escaped. Bullish predictions of a 25 per cent increase in property values in Abu Dhabi, as suggested by Morgan Stanley Research late last year, now seem
less likely.
Yet, the emirate may well be better placed to weather the financial storm than elsewhere, given its long-term view of sustainable, balanced development. Peter Wilding, deputy CEO of developer Capitala, agrees the property market has indeed been affected by the global downturn.
"The region is part of the overall global market and [is] not immune," he says. "It would be naïve to pretend that values have been unaffected following recent market turmoil."
However, Wilding is certain Abu Dhabi must remain firmly focused on the bigger, more strategic picture.
"We, just like global markets, will always face economic cycles," he says. "The government's Plan Abu Dhabi 2030 [Urban Structure Framework Plan] clearly supports
this view and should prompt all of us in the real estate sector to take the creation of real value in a way which allows longer-term environmental, physical and social benefits to be generated."
A mature market
The emirate's commitment to creating a mature, sustainable city has long been evident with Plan 2030, and its provision for housing projects across all budgets and needs. Although many recent developments could safely be described as high-end or luxury, major developers such as Aldar and Sorouh have confirmed that projects aimed at middle-income earners are under way.
As Gurjit Singh, chief property development officer for Sorouh Real Estate PJSC says, "Affordable housing has always been in our plans, as this is part and parcel of nation-building. This strategy is encapsulated in the Plan Abu Dhabi 2030 and Sorouh fully subscribes to the strategy."
Dr Mohammad Guidoum, CEO and founder of RE/MAX Abu Dhabi, feels that such housing projects are entirely necessary in an evolved property market.
"According to our research, we are seeing that buyers will currently only look at property priced between Dh400 and Dh1,100 per square foot," he says. "Now there is no choice but to [build] affordable housing, as that is what the majority wants – buyers in this market are looking only for shelter for themselves and their families." Wilding agrees: "Any move towards creating a better understanding of what the market wants is welcome and necessary.
From our own research, we have responded to this broader demand at [our project] Arzanah by creating different neighbourhoods, each with its own accommodation mix and style. The choice of product and pricing will remain a key feature in our marketing strategy."
Attracting talent
It will not only be consumers who benefit from affordable housing. "Plan Abu Dhabi 2030 wants to attract the best talent around [to the emirate]," says Dr Guidoum. "It will be difficult to attract this talent if housing costs eat up 40 per cent of your income. It will be in the interests of the whole industry to have decent-quality [developments] that can be afforded – real estate is an integral part of Abu Dhabi's future, and it will be difficult to achieve Plan 2030 without it." So what lies in the future of Abu Dhabi's property market? According to Singh, the focus on a broader range of developments will be key.
"The future will see a more balanced approach to the provision of all types of housing," he says. "[Our] company will continue to develop real estate for the various market segments, and this will be carried out in response to the market demand for these properties."
A secure environment
Wilding believes that the fundamentals of the market are still sound. "We remain a safe and secure environment with substantial unsatisfied demand for most types of accommodation, particularly if built in the right place, of the right quality, at the correct price point and at the right time," he says.
And he maintains a positive attitude regarding prospects for the emirate. "Within Abu Dhabi there remains a more realistic and considered approach to development, where proven demand generates a realistic response in terms of accommodation mix, quality and affordability," he says. "Once liquidity and consumer confidence fully return, a steady growth in this market is assured. We remain confident in the long-term potential of the market."
