Aldar Properties, a government-backed real estate developer, initiated a deal on July 19 with three contracting companies, Al Jaber Building, El Seif Engineering and Pembinaan, to build 5000 villas for Emiratis in Abu Dhabi. The development, named Al Falah, will consist of five self-sustained villages, each with its own facilities and amenities, and will likely reach completion by the third-quarter of 2012. The project is part of The Plan Abu Dhabi 2030: Urban Structure Framework Plan.
Al Falah, which will cost $2.55bn, is east of the Abu Dhabi International Airport and will cover about 1200 ha.
Given the fact that many developers in the region are struggling to fulfil their building commitments due to the global credit crunch, the project is seen by many as testimony to the emirate’s commitment to meet the housing needs of its residents.
Aldar is not the only developer catering to the needs of local residents. Sorouh Real Estate is expected to contribute 2000 to 3000 units in Abu Dhabi, while Al Qudra Real Estate has a large project planned for the eastern region of Al Ain.
“Today we have the Ain Al Fayda project, which is 24 sq km and will supply about 6000 residential units that will be used as part of the national housing programme,” Mahmood Ebraheem Al Mahmood, the CEO of Al Qudra Holding, told OBG.
Tamouh, another developer, is expected to deliver more than 3000 units in the Jebel Hafeet area.
Both Abu Dhabi and Al Ain have an undersupply of housing across all segments, brought on mostly by an influx of foreign workers in recent years.
According to Abu Dhabi’s Department of Economic Development, between 2002 and 2007 the emirate’s population grew at an average annual rate of 4.8%. This number leapt even further for the years 2005-08, with growth figures averaging between 6-7%.
Meanwhile, the Abu Dhabi Chamber of Commerce and Industry estimated a supply shortfall of 50,000 units in 2008.
Citibank’s research team believes this undersupply will continue, with an excess demand of 34,000 units in 2012 based solely on projected population growth.
Due to this continuous swell of residents, UAE nationals have watched prices skyrocket in the capital, leaving many paying higher rents or prices for new homes.
In response, according to the Abu Dhabi Urban Planning Council (UPC), over 50,000 homes will be built for Emiratis over the next 20 years. Of this amount, roughly 30,000 of the units will be erected in Abu Dhabi and 20,000 in the city of Al Ain. In the first three years alone the project cost is estimated to reach $6.8bn. In addition to the 5000 homes in Al Falah, there are plans for plots in others areas of the emirate, including 10,500 homes in South Shamkha, approximately 13,000 in Al Wathba, and between 2000 and 3000 in central Shamkha.
There is also speculation that the housing in these areas could be given to Emiratis free of charge. However, according to the UPC a final decision has yet to be made on this.
Although the current housing situation is not going to be fixed overnight, the government, working in concert with developers, is resolute in increasing the amount of units coming on to the market for nationals.
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