Abu Dhabi Realty Perturbed by Dubai World Crisis? Facts on the UAE Economy in these Troubling Times
In an exclusive interaction with Mr. Tej Kohli, Founder and CEO, of Ozone Real Estate, a number of revelations emerged on the financial and economic crisis of the past months and its impact on the Abu Dhabi market. Being an eminent Abu Dhabi-based real estate developer, Kohli is well positioned to interpret the present-day and future projections of the property market in Abu Dhabi.
Kohli has demystified the ambivalent aura encircling the Abu Dhabi realty sector, given the current upheaval in Dubai -- with the recent announcement made by Dubai World, deferring its international debt repayments of US$60bn. He speaks on how the UAE capital remains distinctly positioned to endure the on-going global economic scenario and will emerge unfazed.
Dealing with one blow after another, from the global recession meltdown to the recent Dubai World crisis, it will be interesting to note how Abu Dhabi would manage to stand firm in the face of the unstable financial crisis.
Kohli reveals, "One has to note that Abu Dhabi is mainly sustained by oil income. It has an excellent surplus as its governing bodies have maintained cash reserves by controlling all the central banks and being the backbone of the money market in the UAE. Although the global financial crisis, the increasing price of exports and a decline in external investors, affected Abu Dhabi, just like all other nations experiencing the effects of the global turmoil, Abu Dhabi is actually witnessing a 4 percent rate of growth, in contrast to the negative growth experienced by many western countries. What's more! Now, there is talk of Abu Dhabi coming to Dubai's rescue."
Kohli is confident Abu Dhabi will shine forth as the steely, more stable emirate in contrast to its colorful neighbor. He is of the opinion that Abu Dhabi's fundamentals are holding solid in spite of the downturn, and that property buyers and investors are sending out positive feelers for the future. Even as financial blows threaten to eclipse the Middle East, Abu Dhabi is developing as the world's best positioned cities to withstand financial commotions. Kohli reveals, "This year will be remembered by all as Abu Dhabi's defining moment in its ride to becoming the soul of the UAE."
He remarks, "Abu Dhabi has strong fundamentals, and given these fundamentals it never got mired into a speculative market scenario as compared to its counterparts. Given these solid principles, the capital is sure to be one of the best areas for real estate investment in the UAE, in the months and years to come. Moreover, with Abu Dhabi's intervention, in bailing out Dubai, it will function as a guarantee of the emirate of Dubai."
As the rest of the world focuses its gaze on UAE, one wonders where the Abu Dhabi real estate market will go from here. Kohli opines, "Abu Dhabi has been cushioned by its conservative approach to the pace of real estate development, combined with its substantial oil revenues, as compared to what we have witnessed in Dubai."
He further clarifies, "All these factors have resulted in the UAE capital being in an enviable position to strongly tackle and weather the global economic crisis. The real estate market is on the path to rapid development, as one of the main beneficiaries of that strength. Investors around the globe are viewing Abu Dhabi as the most promising emirate to exhibit a solid performance in the MENA region. We expect the local population to grow at a steady rate and pace in the medium to long term while we expect a growing demand for homes in well-conceived, free hold developments such as SHAMS Abu Dhabi and our very own Cassia Bay Tower on Al Reem Island."
Kohli is of the opinion that the year, 2010, will usher in a new era of diversification expanding its appeal to global visitors, serious property investors, retailers and hoteliers. He predicts, "The coming years will determine Abu Dhabi's position, as it progresses to overtake its counterparts in becoming the UAE's number one show-stopper."
As the rest of the world witnesses a pall of gloom over their property sectors, growth prospects and changing market dynamics, it is interesting to watch how Abu Dhabi stands in the face of all the turmoil in the real estate market.
Kohli opines, "Abu Dhabi is in a fortunate position to learn from Dubai's mistakes and also benefit from its progress. It has witnessed what did well and what didn't do quite so well from Dubai, and going ahead from there Abu Dhabi has valuable lessons to make great strides in progress and development."
Although the recent credit defaults by Dubai somewhat cast a shadow on the financial system, as a whole on the region Kohli is confident of Abu Dhabi's emergence as a potent force in the region. He claims, "Although the Dubai World crisis might not be helpful for Abu Dhabi -- in the short run -- by 2010, I expect that perception to cease, especially if the forces in the financial sector in Dubai become more transparent in their financial dealings."