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SUDAN ProPerty tyPe SeCoND QUArter | 2007
Abu DhabiReal Estate Overview
Co l l i e r S i N t e r N At i o N A l | M e N A r e G i o N
eCoNoMiC HiGHliGHtS
Abu Dhabis economy accounts or over 60% o the UAEs GDP
Holds 95% o UAE oil reserves and 92% o proven gas reserves
Economic growth at a Compound Annual Growth Rate (CAGR) o 16% over the past ten
years
GDP estimated to reach US$ 159bn by 2010 up rom US$ 98bn in 2006
Emphasis on developing tourism, industrial and real estate sectors to diversiy economy
towards private sector orientated growth and away rom hydrocarbon revenue dependence
Growth in value o construction sector activity orecast to slow to US$ 6.5bn in 2007,
representing a modest 4.3% increase over 2006, compared against 173% growth between
2005 and 2006
Real estate price boom driven by a substantial historic undersupply across all o the key real
estate sectors
Optimism in the real estate sector driven in large part by the property boom in the
neighbouring Emirate o Dubai
Spending in excess o US$ 200bn over the next ve years on inrastructure projects
eCoNoMiC MArket iNDiCAtorS
2006 2007Acua Fcass
GDP: US$ 98bn
o: 2.5bn bpd
tad Baanc: US$ 64.25bn
(supus)
Ppuan: 1.6mn
inan: 10.0%
FDi: US$ 1.9bn
A population surge,
a series of legislative
reforms in 2005
governing property
ownership and the
phenomenal growth
witnessed within
neighbouring Dubai,
have constituted the
main drivers for real
estate investment in
the Emirate
M A r k e t r e S e A r C H | F o U r t H Q U A rt e r | 2 0 0 7
Abu Dhab
CollierS iNterNAtioNAl 1
UAE
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.cs.cm
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ABU DHABi reSiDeNtiAl FoUrtH QUArter | 2007
Current demand orresidential property acrossall segments o Abu Dhabisdemographic spectrumhas outstripped availablesupply. Occupancy levelso approximately 97-98%to remain consistent overthe medium-term uture
reSiDeNtiAl
Despite the announcement o numerous
master-planned developments, the impact
o a two year construction moratorium
imposed between 1999 and 2001 is stillevident in Abu Dhabi. Current demand
or all types o residential property in Abu
Dhabi has outstripped available supply,
with occupancy levels o approximately
97-98% reported across the city. One and
two-bedroom apartments currently enjoy
the highest demand, whilst buildings
with a reputation or eective property
management and a good selection o
amenities have waiting lists or potential
tenants. In addition, new buildings enjoyhigh absorption levels, with some developers
claiming that projects are 100% pre-let well
in advance o construction completion.
Rental prices have steadily increased over
the past six years, with a price appreciation
particularly marked at the upper end o the
pricing scale. The infationary pressures
resulting rom rapid rental price increases
have prompted the Abu Dhabi Government
to issue a law in late 2006, capping
rent review increases at 7% per annum.
Nevertheless, market pressure means that
new leases are commonly contracted at
premiums o up to 25% over the average
passing rents o incumbent neighbours.
Price appreciation in the high income
segment notwithstanding, the largest gap in
the current market remains in the middle
income segment.
Given the extremely limited acilities enjoyed
by existing middle income properties, new
buildings with a range o ancillary acilities
are likely to perorm particularly well. Overall
benchmarks o building quality and acility
provision now are increasing to meet occupier
requirements. All new apartments targeting
middle income occupiers and above oer
central air conditioning and gas acilities.
Almost 70% have underground car parking
while around 25% provide a health club and/or
gym to tenants. Provision o these associatedacilities is now a minimum benchmark or
new developments in Abu Dhabi.
Colliers International has identied
approximately 14,000 villas and 18,000
apartments that are currently under
construction across the city. Economic
growth and a shortage o supply have
provided the natural stimulus or
development activity in the Emirate. Based
on gures supplied by developers operatingin Abu Dhabi or developments either under
construction or planned, we expect the
supply o residential accommodation units
in the city to increase by approximately
205,000 by 2015.
AvErAgE ApArtmEnt rEntAls
70,000
60,000
50,000
40,000
30,000
20,000
10,000
01 Bdm 2 Bdm 3 Bdm 4 Bdm Pnhus
Annuarent(US$)
Md-rang Hgh-end
projEct snApshot
ProJeCt totAl UNitS
Al MArkAziyAH 1,300
Al rAHA BeACH 41,800
Al reeM iSlAND 77,000
BreAkwAter 7,750
GHANtoot 5,000
kHAliFA CitieS 8,000
MoHD. BiN zAyeD City 10,700
SAADiyAt iSlAND 43,500
toUriSt ClUB AreA 15,600
zAyeD SPortS City 3,800
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The continuous fow onew organisations keento establish themselvesin the Emirate, as wellas the natural expansiono existing organisationsagainst the backdropo benign economicconditions, serve as
key demand drivers
oFFiCe
Abu Dhabis ofce sector experienced
development in spurts between 1978 and
2007. In recent years growth has not been as
dramatic as witnessed in the early 1980s whenthe supply o ofce space doubled consecutively
in 1982 and 1983. Since 2000 ofce supply
has grown by 50% to a total o 460,000 m2
o Gross Floor Area (GFA). With a spate
o projects under construction and planned,
Colliers International anticipates that by
2011, existing ofce space supply will increase
by a urther 85% to 850,000 m2 o GFA.
The continuous fow o new organisations
keen to establish themselves in the Emirate,as well as the natural expansion o existing
organisations against the backdrop o benign
economic conditions, serve as key demand
drivers. These actors are urther reinorced
by the Emirates economic diversication
ambitions, and the development o planned
industrial, nancial and ree trade zones.
According to statistics supplied by the Abu
Dhabi Chamber o Commerce & Industry
(ADCCI), there were approximately 60,000
licensed businesses in the city in 2006,
growing at an annual rate o 5%.
Colliers Internationals comprehensive
survey o Abu Dhabis dedicated oce stock
has identied the ollowing characteristics:
There are ew purpose-built primary grade
oce buildings in the city, and the bulk o
them are owned by government or semi-
government entities
Occupancy rates in purpose-built oce
buildings are typically around 98%, with
the balance o space being subject to the
natural vacancy rate which is associated
with lease transers or new tenant t-outs
The quality o the citys remaining stock
is low with the majority o oce buildings
in the city o secondary or tertiary grade.
Nevertheless, the nishes o these
buildings are generally air and they oer
unctional oce space, albeit lacking in
modern communications systems, services
and foor plate design eciency Virtually all buildings suer rom a lack o
dedicated parking acilities
Our research indicates that approximately
415,000 m2 o oce space GFA is currently
under construction across the city. In the
meantime, unsatised demand has resulted
in average rental increases o over 30% in all
oce accommodation under study between
2005 and 2006. There have been urther
increases o around 10% between 2006 and2007, with the reduction in the average level
o increase attributable to the government
imposed rental cap. Despite this, Colliers
International anticipates rents to continue
to rise, until substantial supply enters the
market rom the end o 2009 onwards.
oFFiCe FoUrtH QUArter | 2007
prImArY grADE oFFIcE rEntAl groWth
400
300
200
100
02001 2002 2003 2004 2005 2006 2007
Annuarent(US$/m2)
Class A (Primary): Strong location, purpose-built, high quality fnishing, central provision o Inormation and Communications Technology (ICT), Air-conditioning(A/C) and central heating (C/H), good state o repair, available parking acilities.
Class B (Secondary): Strong location, converted use, moderate quality fnishing, provision o ICT, A/C and C/H, limited parking acilitiesClass C (Tertiary): Poor location, congestion and parking constraints, limited or no ICT, A/C and C/H, adequate state o repair, moderate quality fnishing
projEct snApshot
ProJeCt GFA (m)
Al MAMoUrA 24,000
CeNtrAl MArket 25,000
Al MASooD reveloPMeNt 32,000
CAPitAl PlAzA 25,000
DArwiSH iSlAND City 57,000
Al FAHiM BtB 40,000
Al wAHDA CoMPlex 25,000
PreStiGe towerS 61,000
tDiC oFFiCeS 37,000
etiHAD towerS 65,000
ABU DHABi
ForthcomIng sUpplY
yeAr GFA (m)
2007 24,000
2008 58,000
2009 256,000
2010 183,000
2011 250,000
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The leasable area in theEmirate o Abu Dhabiis set to increase rom526,700m at the end o2006 to 1.4 million mby 2010, representinga 165% increase
retAil
In 2000 there were no destination
retail venues in Abu Dhabi. During the
intervening period, there has been a notable
shit towards the provision o internationalstandard shopping malls, doubling-up as
visitor destinations. The Marina Mall and
the Abu Dhabi Mall both opened during
2001, contributing a total Gross Leasable
Area (GLA) o 139,000m, ollowed by a
urther 35,000m at the Meena Retail Park
in 2002. In 2006, Phase II o the Marina Mall
contributed an additional 40,000m o GLA
to the citys available retail mall stock. The
opening o Al Raha Mall and Al Wahda Mall
in May and July 2007 respectively increasedthe existing supply by a total o 172,500m.
Early indications suggest that these malls
are perorming in line with the operators
expectations. An additional 46,000m is
anticipated in November 2007 with the
completion o the Al Khalidiyah Mall.
The new malls have introduced the concept
o convenience shopping in a climate-
controlled environment with the added
benet o dedicated parking, crche, and
adequate restroom acilities marking a shit
away rom the citys traditional high-street
retailing orientation. This continuing trend
towards one-stop shopping environments, in
tandem with increases in disposable income
over the last decade, has been refected
in the number o recently completed and
orthcoming retail developments.
In mid-2008, Aldar Properties are expecting
to complete a modern Arabian Souq
(ShopCentral), as part o its fagship Central
Market development. With the addition
o this new oering, it is anticipated that
traditional modes o downtown retail in
Abu Dhabi will change dramatically. This
is in part due to the location o the Central
Market project, at the intersection o the
Airport Road, Khalia Street and Hamdan
Street. The year 2010 is likely to represent
a watershed or retail market perormance inthe city, with Sorouh Real Estate set to open
the Al Reem Mall with 130,000m o GLA
and the Al Yas development adding a urther
300,000m o leasable area.
The leasable area in the Emirate o Abu
Dhabi is set to increase rom 526,700m at
the end o 2006 to 1.4 million m by 2010,
representing a 165% increase. In 2010,
Abu Dhabi will have 0.87 m o GLA per
capita. Colliers International Retail Servicesproject that in order to support this volume
o retail mall stock, an approximate annual
retail spend o US$ 4,900 per capita will be
required.
CollierS iNterNAtioNAl
retAil FoUrtH QUArter | 2007
UpcomIng rEtAIl locAtIons
ABU DHABi
abu dhabi shopping mallcumulative supply
2005 2006 2007 2008 2009 2010
GlA
m2
A rm isand15.8%
A yas isand25%
zad Sps C8.4% khada
5.6%Baa
4.7%
Bn h Bdgs3.8%
ohs5.7%
A raha Bach36.5%
gcc rEtAIl mAll glApEr cApItA
2.50
2.00
1.50
1.00
0.50
0.00
PeCapitaGlA
(m2)
radh Jddah Abu Qaa Bahan DubaDhab
2000 2010
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
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In line with thegovernments objective ostimulating tourism, the
ADTA plans to license theconstruction o 17,000 newhotel rooms in the Emirateby 2015, o which 45%would be in the 5* category
HoSPitAlity
Historically, Abu Dhabi has been
overshadowed by Dubai as a leisure tourist
destination. Demand or hotel accommodation
in the city is driven predominantly bybusiness tourism, which accounts or 75%
o overall hospitality market demand. In
2006 the Emirate witnessed average hotel
room occupancy rates o 78.6%, while
serviced apartments achieved approximately
80%. Average Room Rates (ARR) rose by
approximately 40% compared to the previous
year, to US$ 167 and US$ 235 or 4* & 5*
rooms respectively. Early industry reports
suggest that Q2 2007 occupancy rates have
been maintained at 78.5%.
The Abu Dhabi Tourism Authority (ADTA)
is seeking to increase the market share
enjoyed by the leisure tourist segment to
40% by 2015. It plans to do so by developing
destination attractions or cultural, sporting,
and Meetings, Incentives, Conerences
and Exhibitions (MICE) tourism segments.
Such initiatives include the provision o
dedicated hotels, resorts, art & culture
venues, shopping malls and other acilities
which aim to capitalise on Abu Dhabis
endowment o natural islands, long stretches
o beach, and its position as the UAEs socio-
political and cultural core.
The recent announcement o an agreement
between Mubadala, a government-owned
investment authority, and Formula 1 ounder
Bernie Ecclestone that Abu Dhabi will play
host to the prestigious racing circuit rom
2010, has been hailed as the frst major step
in the citys eorts towards becoming a more
widely recognised leisure tourism destination.
This has been complemented by the decision
o the world-amous Louvre and Guggenheim
museums to establish Middle East counterparts
on Abu Dhabis Saadiyat Island, both
scheduled or completion in 2012.
In line with the governments objective
o stimulating tourism, the ADTA plans
to license the construction o 17,000 new
hotel rooms in the Emirate by 2015, o
which 45% are in the 5* category. There arecurrently 9,500 rooms (including all hotel
categories and serviced apartments) in the
Emirate, with Abu Dhabi city accounting or
approximately 8,000 rooms, with Al Ain, Al
Dharah, Maraq, Ruwais and Liwa providing
the remainder.
Approximately 8,500 hotel rooms are currently
under construction in the city. Increases in
the numbers o visitors to the Emirate and an
expansion in the destination reach o AbuDhabi based Etihad Airways have supported
strong occupancy rates and ARR growth
during the past 18 months. We expect this
growth to be sustainable as Abu Dhabi carves
out a position or itsel as a business, sporting
and cultural tourism destination.
ForthcomIng 4* & 5*
hotEl sUpplY
yeAr rooMS
2007 913
2008 4,114
2009 2,155
2010 1,380
2011 1,600
HoSPitAlity FoUrtH QUArter | 2007
FUtUrE hospItAlItY sUpplY - mArkEt shArE
hotel performance (Q2 2007)
oCCUPANCy 78.5%
Arr (US$) 221
rPAr (US$) 174
(Suc: HBnchma Su, D 2007)
ABU DHABi
4*17.5%5*
45%
3*10.7%
Scd Apamns26.8%
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This market overview is extracted from a comprehensive Abu Dhabi real estate market study carriedout in 2007, available from Colliers International UAE for purchase.
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ABU DHABi reAl eStAte overview FoUrtH QUArter | 2007
Colliers International is a global real estate consultancy company providing a comprehensive
range o property services to a broad range o clients on an international basis. Core services
include property and asset management; leasing; development consultancy & strategic advisory;property valuations and international property investment services.