Realty demand outstripping supply in capital

 

Some 14,000 villas and 18,000 apartments are currently under construction in Abu Dhabi, according to a leading global real estate consultancy.

 

More than 205,000 new residential units are projected to come up in the city by 2015, according to a survey of developers in Abu Dhabi by Colliers International.

“Economic growth and a shortage of supply have provided the natural stimulus for development activity in the emirate. Current demand for all types of residential property in Abu Dhabi has outstripped available supply, with occupancy levels of approximately 97-98 per cent reported across the city,” the survey said.

It pointed out that one- and two-bedroom apartments currently enjoy the highest demand, with the largest gap still remaining in the middle-income segment.

There are waiting lists for good buildings and developers are reporting 100 per cent pre-lets well in advance of construction completion, leading to inflationary pressures, which in 2007 stood at more than 10 per cent in the city despite the seven per cent

rent cap.

“With the city of Abu Dhabi booming and attracting new businesses and talent from all over the world, there has been a historic undersupply across all sectors of real estate whether it is residential or commercial, retail or hospitality,” said Mohammad Al Haj, CEO of MBI, while commenting on the Colliers survey.

MBI invests in real estate and construction, infrastructure and industrial ventures. It is chaired by Saeed Al Fahim.

The company’s investment portfolio covers education, manufacturing, industrial as well as real estate sectors, including office towers, residential buildings and shopping malls, in addition to Al Rawasi International, a specialised company set up last year to build warehousing and logistics facilities.

 

Colliers said benchmarks of building quality and facility provision are now increasing. All new apartments under construction in Abu Dhabi targeting the middle-income group offer central air conditioning and gas facilities as standard.

Moreover, almost 70 per cent offer underground parking and 25 per cent have a gym or a health club.“The situation is similar with the commercial buildings sector, which is again characterised by massive demand from both new businesses as well as expansions by existing ones,” said Al Haj.

 

The GFA in Abu Dhabi has risen 50 per cent since 2000 to the current figure of 460,000 square metres.

The global real estate consultancy said about 415,000 square metres of GFA is currently under construction in the city. It anticipated rentals will continue to appreciate until substantial supply comes to the market in 2009.

Demand had led to average rentals increase of 30 per cent in 2006, but the imposition of the cap helped restrict the rise to 10 per cent last year.