A revolutionary situation where supply and demand are created simultaneously is fuelling Abu Dhabi’s extraordinary property boom. Matthew Brace reports

As Dubai’s construction boom powers forward, another lucrative and exciting property revolution is occurring just down the coast of the Persian Gulf in the capital of the United Arab Emirates, Abu Dhabi.

In late January it was announced that $1.1 trillion was being invested in the Abu Dhabi development market. So important is the Abu Dhabi boom that it has prompted the establishment of the UAE’s second major property exhibition, Cityscape Abu Dhabi.

According to the Middle East branch of the Institute for International Research (IIR), the city was a natural choice. IIR’s general manager, Jessica Sutherland, says: ‘Cityscape Dubai has enjoyed phenomenal success over the past four years. Extensive regional research revealed the need for an additional event within the region. We decided that Abu Dhabi was the perfect destination.’

In 2005 Abu Dhabi reported the highest per capita income in the world – $46,147 – and attracted $4bn in foreign direct investment (FDI). The most bullish of property developers expect the property boom to assist in doubling that FDI figure in a few years.

Annual oil revenue of $90bn is fuel-ling the UAE’s substantial growth (18 per cent in 2004), with government and private enterprise channelling huge amounts of this liquidity into vast construction projects in a strategic move to transform Abu Dhabi – at rapid speed – into a significant global business centre.

This could mean the population doubling in less than a decade.

Jonathan Thompson, international head of the building, construction and real estate department at KPMG, the consultancy which has completed lengthy research in the region, says: ‘The current large petrodollar surplus will continue for some time and there is a medium-term desire for much of it to be managed from the Middle East by developing a thriving capital market and financial hub in the UAE. For this to happen, there needs to be the creation of world-class infrastructure and hence some of the building that we are seeing.’

As well as providing new homes and offices for hundreds of incoming companies and thousands of their employees, the UAE has recognised that wealthy retirees, as well as other wealthy individuals, often desire more than one home. For them, Abu Dhabi offers a safe, sunny winter retreat, without the crowds found in Mallorca or the Côte d’Azur.

Expatriates can hold 99-year leases and UAE nationals can have freehold tenure, so property is being snapped up by Arabs and overseas investors alike.

Possibly Thompson’s most crucial observation is this: ‘A traditional evaluation of the current market in Abu Dhabi would not support the level of investment we are seeing, but at the core there is massive infrastructure investment by the state.’

What this means to the outside world is that Abu Dhabi is not simply planning and building new working and living space to fulfil existing demand as other cities do; it is creating the demand and the supply simultaneously in a revolutionary new style of development. The property boom is both proactive and reactive. Abu Dhabi is putting out the word that it is building a fantastic city of the future and that people should come and live and work there.

As a result, the combined construction, real estate and business services sectors made up
22.5 per cent of the UAE’s economy in 2005, worth a total of Dhm27,780m ($7,564m). On the ground Abu Dhabi is fast turning into one huge building site as gargantuan projects get under way, including the $27bn Saadiyat Island, the $14.7bn Al Raha Beach, Al Gurm Resort and the Central Market projects, Al Reem Island, the $9.26bn Danet Abu Dhabi project, Mohammed Bin Zayed City, the airport expansion, and the US$2.18bn Khalifa seaport and industrial zone. These combine residential, retail, business and leisure uses, and include 218 islands earmarked for development.

Possibly the most ambitious industry is the leisure market. The government’s plan to triple tourist numbers to three million by 2015 means numerous new hotels will add 25,000 rooms during the next decade. Aldar Properties alone has plans for 32 new hotels within the next seven years. One major tourism market could be India’s wealthy middle class, as Mumbai and Delhi are only a three-hour flight away. To cope with the expected increase in visitors, a $5.7bn expansion of Abu Dhabi International Airport is in motion.

While the public are bombarded with investment figures that read like telephone numbers, there is less noise about how developers are allaying environmental concerns by implementing green policies. Some companies, however, are making sustainable and ecological factors a priority.

In their master plan, the architects of Aldar Properties’ Al Raha Beach project, Esquisse, said best practice Ecological Sustainable Development (ESD) principles should be integrated into the design and management of the public domain, including optimising public transport, reducing travel demand and encouraging walking. Also, Esquisse advised that ‘ESD principles be incorporated into the design of buildings and external spaces’.

Landscape architecture and planning firm EDAW was equally conscious of environmental aspects when completing the landscape master plan for Saadiyat Island, which it describes as ‘one of a new generation of sustainable, environmentally sensitive communities within the United Arab Emirates.’

EDAW included detail on the potential impacts on sea grasses, water courses and mangroves, and advised on how to preserve a turtle hatchery and 7,500-year-old archaeo-logical sites on the island. Much of the ‘green building’ technology used in Dubai’s property boom is expected to be adopted in Abu Dhabi to reduce the demand for water and energy, and minimise pollutants.

FIVE TOP PROJECTS

SADDIYAT ISLAND
Saddiyat Island dwarves the rest in cost and size. It is a natural offshore island, which is to be developed into a tourist destination with 29 hotels, marinas, villas, resorts and golf courses, and the region’s first Guggenheim museum.

AL RAHA BEACH
Al Raha Beach is a major (570 hectares) mixed-use waterfront project on the coast, which will create a city-within-a-city. It will have nine hotels, five beaches, four marinas, parks, restaurants and numerous leisure facilities linked by a network of canals, bridges and water transport. 120,000 people are expected to live there. Architects Esquisse say it will become ‘a first world-class development within the Great Arabian Water City of the 21st century’.

YAS ISLAND
Yas Island will house a motor sports racetrack, five-star hotels, a water park, a 300,000sq m retail park, golf courses, marinas, polo clubs, apartments, villas and restaurants, as well as a Ferrari World theme park, with 24 rides and attractions.

AL REEM ISLAND
This will contain several large developments including Shams Abu Dhabi, which will in turn include another adventure in architecture: the elliptical 379m high Sky Tower being built by Sorouh Real Estate. It will be Abu Dhabi’s tallest tower. Al Reem will also have a $8bn residential and commercial project (Najmat Abu Dhabi) for 80,000 people.

EMIRATES PEARL
Emirates Pearl is a $136.2m project being developed by the Tourism Development and Investment Company (investment arm of Abu Dhabi Tourism Authority), which will include a hotel and serviced apartment resort near the Emirates Palace Hotel.

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