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Investing in Abu Dhabi’s Real Estate Sector: Hype or Opportunity?

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Like Dubai, the government of Abu Dhabi is taking significant strides to stimulate its economy and its real estate sector for the foreseeable future. Although real estate prices have steadily declined and continued to experience market corrections, the recently enacted freehold law in the capital promises to spur foreign direct investments through international and expatriate ownership.

Despite the glut of real estate projects on schedule for delivery, Abu Dhabi’s real estate sector shows promising signs to assuage the concerns of home buyers and investors alike. For starters, despite the decline in property prices across the nation, the capital has witnessed an average growth rate of 4.6% in the sector over the past five years, with the value of property transactions generating Dh31 billion in the first six months of 2019.

How can we make sense of this?

Real estate like all sectors is affected by the health of an economy. Although buyers and tenants have more options than before due to imbalances in supply and demand, the capital has made a conscious effort to diversify its earnings and reduce its dependence on the oil sector amidst the decline in oil prices. By the end of last year, the real estate sector accounted for approximately a third of non-oil GDP and 34.4% of Foreign Direct Investments in the capital, further validating growing international interest. Additionally, Abu Dhabi’s Dh 50 billion stimulus package titled “Ghadan 21” (“Tomorrow 21”) shows promise of attracting capital and talent, with mandates to increase ease-of-business by launching “instant licenses” and creating 10,000 jobs for nationals across sectors by 2021.

With opportunity lingering in the air, international firms have shown intent to take advantage of the capital’s real estate sector. With the allure of high quality of life in the UAE and more specifically in the capital, Berkshire Hathaway HomeServices Gulf Properties, Warren Buffet’s brokerage service has plans to expand in the country by opening another office – specifically in Abu Dhabi within the next six months. Phil Sheridan, CEO of the firm stated, “What our leadership team in the US identified was that the UAE is a destination of real value. As the Global Real Estate Bubble Index recently published illustrated that Dubai and, indeed, Abu Dhabi offer good value.”

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