Bid's Dh3b mixed-use project on track

Abu Dhabi: Baniyas Investments and Development (Bid), which is developing a Dh3-billion mixed-use housing project in Abu Dhabi's suburbs, said Mondayit had achieved 60 per cent completion of the project's first phase and was on track for completion of all three phases by 2012.

"Projects that are built around end-users have better potential," Bid chief executive officer Wael Tawil said in an interview with Gulf News on the sidelines of Cityscape Abu Dhabi. "We have not faced any hiccups so far."

Tawil said all residential units in the first phase had been sold along with nearly 80 per cent of units in the second phase due to heavy demand from local residents and some Gulf Cooperation Council nationals. Construction on the second phase is due to start "soon," he added.

The project offers 1,500 residential units including villas and apartments, a shopping mall, and a 20,000-capacity football stadium to be built on the site of the current Baniyas Sports Club.

UAE nationals buy in

Unlike demand for housing in Abu Dhabi and Dubai, the Baniyas development's demand has come mainly from UAE nationals, a fact that should help the company avoid further possible declines in the real estate markets in Dubai and Abu Dhabi.

Tawil said the development faced "very small" effects from declining property prices elsewhere in UAE.

According to research by the real estate consultancy Colliers International, Abu Dhabi's market will remain undersupplied through at least 2013 when the shortfall is expected to reach 42,000 units.

Still, property prices declined by about 40 per cent and rental rates fell by 9 per cent in 2009 as a result of the economic downturn.

Dubai's residential properties, on the other hand, fell in value by 50 per cent in the first half of 2009 and rentals dropped by 25 per cent.

The market still faces an oversupply of 65,000 units with 41,000 more due to enter the market this year, according to Colliers.

Integrated market

"The one thing we learned last year is there is no such thing as decoupling," said Ian Albert, regional marketing manager for Colliers. "We are integrated into a global network of finance. When the global economy recovers, we will recover."

Albert pointed to Saudi Arabia and Egypt as examples of markets with "sound fundamentals."

Lower proportions of foreign residents and sustained high demand from locals give those markets stronger growth drivers and make it easier for developers to forecast demand, he said.

But for UAE, recovery in the real estate market will depend on the increase in expats, Albert said.