Dubai real estate crash also slows Abu Dhabi down
Posted on 29 October 2009 with no comments from readers
The latest forecast for housing completions in Abu Dhabi over the next four years is down to 45,000 units as the impact of the real estate crash in Dubai is felt on its neighbor.
That is the conclusion of real estate agents Jones Lang LaSalle. This represents about half the number of housing completions expected before the crash in Dubai.
Pinning blame
Of course, the blame is not entirely down to excessive building in Dubai which now has a great deal of empty space available at rock bottom rentals. Dubai house prices and rents are down by around 50 per cent on a year ago.
But long-distance commuters are renting in cheaper Dubai, reducing demand for Abu Dhabi apartments, much as Dubai workers used to do in Sharjah.
Smaller developers in Abu Dhabi have taken fright since the crash last autumn and face similar difficulties to the Dubai developers in raising finance for their projects.
However, the squeeze on upcoming supply in Abu Dhabi could be good news for owners and landlords in the long-run. The oil-rich emirate looks to have a bright future, and 45,000 completions will keep property supply tight and prices and rents up.
Those watching the first Formula One race in the emirates in Abu Dhabi on Sunday and crowding onto Yas Island are also seeing into the future. Abu Dhabi’s oil and gas expansion plans and infrastructure investments are going to keep the UAE in the economic fast lane, whatever happens in Dubai.
But it is a little ironic if the Dubai real estate crash results in a supply shortage in Abu Dhabi down the track. If only Abu Dhabi had gotten on with building five years earlier then it would not be in this position.
Too slow off the mark
To stay ahead in this race you need to invest ahead of an oil boom, not after it has finished. Perhaps this lesson will be learnt now.
But the advantage stays with Dubai in pole position as the commercial capital of the nation with its infrastructure now built or close to completion, albeit with a few bills left unpaid and a debt level to match the height of the Burj Dubai.
