After three years of talking the market up, the Abu Dhabi real estate sector is finally able to rival Dubai. But with that success comes challenges, and there are still areas where it will need to follow the path set by its northern neighbour.
Although the emirate has long been tipped to follow in Dubai’s footsteps, its initial progress was slow. Despite launching a raft of masterplanned developments similar to those in Dubai, such as marina apartments, beachfront villas and urban tower blocks, many felt the capital’s dreams would never materialise. Instead, they expected it to become bogged down in the traditional bureaucracy that has held up schemes in the past.
But as the market has gained critical mass over the past year, those who once doubted it have come to view the emirate as a serious investment opportunity. With runaway demand, developers now face little difficulty in selling their projects before they are even built.
But they do still have challenges. With billions of dollars worth of development on the drawing board and a limited pool of contractors and materials, developers face a capacity crunch. This is the main problem on which most are now having to focus.
The government has adopted an approach that should limit the severity of the problem, and its Plan Abu Dhabi 2030 masterplan will force developers to work together.
The remaining danger is that, although development is managed by the masterplan and the Urban Planning Council, the sales process is less controlled. Dubai has learned what this can mean the hard way. After a series of project cancellations, it established an escrow law and the Real Estate Regulatory Authority to ensure investors are protected. As Abu Dhabi moves further down the road of development, it will have to follow suit once again.
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