ADPG Thought of the Day: Abu Dhabi Real Estate 'Boom' or 'Bust'

Residents in Abu Dhabi witnessed first hand the rise and fall of Abu Dhabi's property market due to the high price of oil and global economic crisis. Abu Dhabi is the richest of the seven Emirates in the UAE producing a total of over 2,000,000 barrels of oil per day (bpd). With the prices of oil rising to $147 a barrel in 2008, there is no wonder the Emirate experienced an economic boom, especially in the Property Industry. This brought countless major investments and landmark projects such as the Cultural District on Saadiyat Island, MGM Grand, and the Formula 1 track on Yas Island. Not to mention, the numerous construction projects within the city and current plans to expand outside the metropolis area. The boom meant more opportunity in terms of potential investment, projects, and careers.

If such a boom though was not controlled, Abu Dhabi would have ended up in a much worse situation than the current due to the global economic crisis. This is thanks to the government's initiatives to regulate property developments and transactions. A development plan "Plan Abu Dhabi 2030" was developed to help manage the city's growth. Also Abu Dhabi is putting in place a code of conduct for the real estate brokers to promote transparency and more importantly, professional ethics in their practice. Abu Dhabi is working hard as well on its infrastructure to ensure that it accommodates to the needs that may face the future generations of the UAE.

Although very ambitious, the current economic crisis thinks otherwise. Some projects have been slowed, put on hold, or just taken off the map. Abu Dhabi's plans will most probably be revised accommodate to their immediate needs while keeping into account any future forecasts.

What does this all mean for the property market?

Simply, a lot less trade will happen, buying and rent prices will fall, projects will be cancelled, jobs in the sector will be lost, people will leave, and voila!! Our supply and demand problems are fixed!!! Life can go back to normal (easier said than done). Real Estate Brokers though will stick around, the plan will still be there, and life will go on. It really falls down to 2009, we will have to wait and see what 2009 has in store for everyone in Abu Dhabi and moreover the world.