Abu Dhabi real estate a favorite investment class for 2008
Factors as diverse as the likely revaluation of the dirham and the outlook for interest rates combine with property undervaluation to make Abu Dhabi real estate a favorite investment class for 2008. The poor outlook for global real estate and equity alternatives are also increasingly persuading investors that this is the year to invest locally.
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It is hard to see the downside to investing in Abu Dhabi
real estate at the moment
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Investment in an asset class is always partly a matter of eliminating the competition. If you can find a better home for your money why would you invest in Abu Dhabi real estate?
Surveying the alternatives, it is clear that many of them have fallen by the wayside. US property dipped into recession in 2007 and UK real estate followed in the autumn. US equities delivered a poor return over 2007, beaten by a fixed-rate deposit account. Hedge funds had a miserable year with performance patchy at best.
So if you are searching for pure investment return in 2008 you have a lot less options than at the start of 2007, before anybody had heard of the sub-prime crisis and credit crunch. You might, of course, be kicking yourself that you did not buy gold or UAE equities last August, but then again now might not be the time to plunge into these markets after a strong advance.
Positive aspects
Therefore by default any investor in the UAE is bound to be looking at Abu Dhabi real estate. This is still a fledgling market with very little by the way of hard data to analyse but there are a great many signs to warm investor interest.
How many times is a new property market created in one of the world's richest cities? What sort of future does a place like Abu Dhabi have with oil and gas prices look set to remain strong for the next decade as demand surges and supplies remain restricted?
The macro view is excellent. The devil is in the detail of deciding where and how to invest. However, since the middle of last year the major developers like Sorouh and Aldar have been releasing more and more property on to the market, and sales have turned up strongly.
Off-plan sales
It is therefore just a question of registering with the major firms and waiting for an attractive development in a good location to come up. These are substantial companies well supported by the Abu Dhabi government and your only risk is in the timescale of delivery, not the financial strength of the developer.
In fact, both Sorouh and Aldar have been making impressive progress down-on-the-ground arranging long term alliances with key contractors and suppliers to enhance the efficiency of the construction execution process. Thus surprises in construction timetables might even be to the upside.
Meanwhile, the troubled US economy continues to have a mirror image in the UAE where high oil prices and falling interest rates (courtesy of the dollar-pegged dirham) are fuelling an economic boom.
And even the expected revaluation of the UAE dirham will provide a one-off bonus for property investors if they make their investment in time. In short, Abu Dhabi real estate faces an almost ideal set of circumstances promoting the sector in 2008 and it is hard to see what might go wrong.
Abu Dhabi is the largest of the seven Emirates and the Federal capital of the UAE. It occupies an area of 26,000 square miles. Its long coastline - the shallow waters of the Southern Persian Gulf, extending from the base of the Qatar Peninsula in the west to the border of the emirate of Dubai on the north east, was once the world's best waters for pearling. When the pearling industry declined, oil discovery in the offshore oilfields of the Southern Persian Gulf revived the economy of Abu Dhabi. Abu Dhabi was also the first emirate to export oil from the Umm Shaif offshore field in 1962. On the land, it stretches south to the oases of Liwa where some of the world’s largest sand dunes can be found , and east to the ancient oasis of Al Ain. This makes Abu Dhabi the largest as well as the most populated of all the emirates.
The rise of British naval power
in the Persian Gulf in the mid-18th century coincided with the
rise of two important tribal confederations along the coast of
the lower Gulf. These were the Qawasim, whose descendants now
rule Sharjah and Ras al-Khaimah, and the Bani Yas, whose
descendants are now the ruling families of modern Abu Dhabi and
Dubai.
The Bani Yas were originally
based in Liwa, an oasis on the edge of the Empty Quarter desert,
but moved to Abu Dhabi in 1793. They engaged in the traditional
Bedouin activities of camel herding, small-scale agriculture,
tribal raiding and extracting protection money from caravans
passing through their territory. The Bani Yas divided into two
main branches in the early 19th century when Dubai split from
Abu Dhabi.
After the collapse of the world
pearl market in the early 20th century, the entire coast was
plunged into abject poverty. In 1939, Sheikh Shakhbut, the ruler
of Abu Dhabi, granted the first of several oil concessions on
his territory. It was not until 1958, however, that oil was
found in the emirate. With a population at the time of only
15,000, Abu Dhabi was on its way to becoming very rich.
Britain's 1968 announcement
that it would leave the Persian Gulf in 1971 came as a shock to
most of the ruling sheikhs. Negotiations eventually resulted in
independence for Bahrain and Qatar and the creation of a new
federal nation: the United Arab Emirates. The UAE, with Abu
Dhabi as its capital, came into existence on 2 December 1971.
When oil revenue started pouring in, the reed and mud-brick huts
were rapidly replaced by banks and boutiques.
In recent years, the settlement
has spread to occupy virtually all of Abu Dhabi island. It's
been remodelled in less than 40 years to become the classic
Arabian petrodollar city, a wealthy metropolis filled with
gardens and tall mirror-glassed buildings.
Abu Dhabi, the capital of the UAE, is a modern city flanked by architecturally striking skyscrapers. It is the center of government and business life in the UAE, headquarters of the emirates oil operating companies. Abu Dhabi is mainly an oil-driven economy. Abu Dhabi is the largest of the seven Emirates and the Federal capital of the UAE. It constitutes nearly 86.7% of the nation's total land area including nearly 200 islands.
| Available for first sale - Completion 2008 |
| Dec 2008 |
Dec 2008 |
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| Dolphin Towers |
Oceanscape |
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Abu Dhabi is a modern city with state of the art infrastructure, exquisite shopping complexes, and recently developed tourist attractions. Abu Dhabi like the rest of the Emirates is one of the safest tourist destinations in the world with some of the best tourist facilities. It is a vibrant and fascinating city with an impressive skyline, parks and gardens, luxury hotels, lavish villas and mansions, boulevards and beaches. Today over 120 million trees have been planted in the emirate of Abu Dhabi alone.
Although Abu Dhabi has been slow to join the regional real estate boom, but with new property ownership laws in place since last summer, the emirate has already launched several huge projects, including the $14.7 billion Al Raha Beach and $6.8 billion Shams Abu Dhabi project by Sorouh Real Estate.
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