With real estate projects continuing to bloom around Abu Dhabi, many in the sector are greatly looking forward to the months ahead, as the recent legal changes allowing foreign ownership are expected to add extra heat to the market.
A decree issued by Sheikh Khalifa bin Zayed Al Nahyan on August 13 brought in the new regulations. Industry insiders expect it to lead to a 25% per annum increase in construction activity in the emirate over the next three years.
Early September saw the local real estate boom in full swing too, as real estate development, management and investment company Aldar Properties announced that eight contractors had been invited to tender for the dredging and reclamation contract for its al-Raha Beach Development.
Archirodon Construction (Overseas), Boskalis Westminster Middle East, China Harbour Engineering, Dredging International, Great Lakes Dredge and Dock Company, Jan De Nul Dredging, National Marine Dredging and Van Oord were the companies selected, with the final contract to be awarded at the end of the month.
Al-Raha will eventually house some 120,000 residents and cover some 450 ha of new land along an 8-km shoreline. The Dh54bn ($14.7bn) development will also be aimed particularly at foreigners, Aldar management had earlier announced, as the decree nominates the project as a property investment area for foreigners.
The new decree on foreign ownership "will enable us to sell select local real estate to international as well as national investors," Ahmad Ali al-Sayegh, chairman of Aldar Properties, told Gulf News in its August 31 edition. "I believe that [al-Raha Beach Development] is only the first of many real estate ownership opportunities that Aldar will offer to worldwide property buyers in the future."
Another property developer benefiting from the decree is Reem Investments, which is developing a quarter of Reem Island. It also said it would now offer property on lease and sale terms to nationals and foreigners, following the announcement of the new law.
"This is a positive development and we can now go ahead with our plans," a company official told reporters.
The new law follows similar practice introduced recently in neighbouring Dubai. There, a record Dh660m ($179.72m) in land deals was done in one day back in August, with the emirate now home to 7% of all the world's building cranes, according to a recent Deutsche Bank report.
Such results are naturally a major draw for other emirates, with Abu Dhabi's new law now likely be further impetus for other Gulf states to liberalise their property ownership legislation.
It also comes after Abu Dhabi took the decisive step back in March this year of allowing nationals to buy and sell properties.
Under the new law, specific property investment areas for foreigners have been introduced in which non-UAE citizens can now own surface property. Such nationals will be allowed to purchase property based on a long-term land title agreement of 99 years, or a long-term surface ownership agreement of 50 years, renewable for the same period subject to the agreement of both parties. Non-UAE nationals will not, however, be allowed freehold title to land, news agency WAM announced on August 13.
Now, many property insiders are expecting that further steps will be taken to widen ownership laws still further. There is also a hope that the decree will clear up issues such as the transfer of ownership of properties allocated to UAE nationals prior to the date of the property law, the by-laws for investment areas, and regulations regarding the establishment and management of ownership associations.
The arrival of more foreign investors is also likely to add enormously to already skyrocketing demand. Neighbouring the al-Raha Beach Development lies the al-Raha Gardens, a project that sold out in breathtaking time. Many real estate watchers predict that such rapid sell-outs are likely to be the norm for many developments in the months ahead.
The new law will have "a great impact on transforming the economy and our society", Mohammed Omar Abdullah, director general of the Abu Dhabi Chamber of Commerce & Industry, told Bloomberg on September 2.
It may also alter some of the dynamics in what many saw as an increasingly likely problem - that of a future disjuncture between property supply and demand. The real estate market is often prone to such phenomena, given the time lags involved, and in the Emirates, a big concern had been that the supply of new buildings would outstrip demand in the short term, leading to falling rents, property prices and profit margins. Yet with a further injection of investment interest from foreign capital, perhaps the evolution of the market can be altered to the benefit of both investors and developers.