The unique strengths of Abu Dhabi mean the Emirate’s real estate sector is poised for continued growth despite the global downturn, said Sorouh’s Managing Director, Abubaker Al Khouri, in a speech on Tuesday in London. Speaking at the Abu Dhabi Investment Forum at the Dorchester Hotel, Al Khouri outlined the strong market fundamentals which ensure demand will remain strong over both the short- and long-term. These include an economy which is experiencing high levels of GDP growth, a booming population and recent liberalisation of the real estate sector. Al Khouri said: “In the last three years, we have seen liberalisation of the property laws, a new surge of private development and the strengthening of the mortgage market, which have all fuelled the growth of the real estate market. “There is heavy demand in Abu Dhabi from many different segments: Abu Dhabi locals and the other UAE locals who work in Abu Dhabi; the expats who have been living here; and the ones yet to come.
Demand is clearly strong but that massive demand cannot be met overnight and there are short-term shortfalls in supply. Earlier this month, the Chamber of Commerce released latest forecasts, which predict a shortage of at least 28,000 units this year. But the resources of Abu Dhabi are being mobilised to meet that demand, through Government and private sector investment. He said that Abu Dhabi was comparatively well-cushioned from the global financial crisis, commenting: Abu Dhabi is not immune to the tightening of the credit market and the global financial downturn but it is well inoculated and it has unique strengths which ensure that the real estate sector will prosper over the long term, even in spite of the current short term challenges. Our oil reserves, the strong spending by Government, the recent injection of Dh120 billion into the banking system and above all the strong demand for property - all these factors will help protect us from the global situation. Our real estate sector will prosper over the coming years.
Al Khouri predicted a “rush to quality” by consumers and by banks, both of which would look for solid real estate developers and developments into which they would make investments.The larger and well-capitalised companies such as Sorouh, which has projects worth more than Dh70 billion under development, would benefit from this. Overall, though, the Emirate is well positioned, he said: The severity of the global situation will bring challenges. Our real estate sector may see some short term margin compression, mostly affecting the smaller developers, but overall, the fundamentals have not changed and it will prosper over the coming years. At the heart of that future growth lie the fundamentals of strong demand and as yet limited supply. That is why, for any real estate developer, Abu Dhabi is the best place in the world to be today. Abu Dhabi-based Sorouh Real Estate PJSC is one of the UAE’s leading property companies, with more than Dh70 billion worth of projects under development in the UAE and internationally. Established in June 2005 with a capital of Dh2.5 billion, Sorouh is now one of the largest real estate developers on the Abu Dhabi Securities Exchange. In July 2008, the company’s market capitalisation was Dh23.2 billion.