SUDAN Property type SECOND Quarter | 2007

c o l l i e r s i n t e r nat i o na l | M E N A RE G IO N

Abu Dhabi
Real Estate Overview
M A RKET RE S E A R C H | f o u rt h Q ua rt e r | 2007
Iran

Economic Highlights
Abu Dhabi
• Abu Dhabi’s economy accounts for over 60% of the UAE’s GDP
UAE
Saudi Arabia Oman
• Holds 95% of UAE oil reserves and 92% of proven gas reserves
• Economic growth at a Compound Annual Growth Rate (CAGR) of 16% over the past ten
ECONOMIC Market Indicators years
2006 2007 • GDP estimated to reach US$ 159bn by 2010 up from US$ 98bn in 2006
Actual Forecasts
• Emphasis on developing tourism, industrial and real estate sectors to diversify economy
GDP: US$ 98bn towards private sector orientated growth and away from hydrocarbon revenue dependence
• Growth in value of construction sector activity forecast to slow to US$ 6.5bn in 2007,
Oil: 2.5bn bpd representing a modest 4.3% increase over 2006, compared against 173% growth between
2005 and 2006
Trade Balance: US$ 64.25bn
(surplus) • Real estate price boom driven by a substantial historic undersupply across all of the key real
estate sectors
Population: 1.6mn • Optimism in the real estate sector driven in large part by the property boom in the
neighbouring Emirate of Dubai
Inflation: 10.0%
• Spending in excess of US$ 200bn over the next five years on infrastructure projects
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

www.colliers.com

Colliers International 
 Abu Dhabi
Current demand for
residential property across
all segments of Abu Dhabi’s
demographic spectrum
has outstripped available
supply. Occupancy levels
of approximately 97-98%
to remain consistent over
the medium-term future
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
 Colliers International
RESIDENTIAL fourth Quarter | 2007
Residential
Despite the announcement of numerous
master-planned developments, the impact
of a two year construction moratorium
imposed between 1999 and 2001 is still
evident in Abu Dhabi. Current demand
for all types of residential property in Abu
Dhabi has outstripped available supply,
with occupancy levels of approximately
97-98% reported across the city. One and
two-bedroom apartments currently enjoy
the highest demand, whilst buildings
with a reputation for effective property
management and a good selection of
amenities have waiting lists for potential
tenants. In addition, new buildings enjoy
high absorption levels, with some developers
claiming that projects are 100% pre-let well
in advance of construction completion.
Rental prices have steadily increased over
the past six years, with a price appreciation
particularly marked at the upper end of the
pricing scale. The inflationary pressures
resulting from 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 of up to 25% over the average
passing rents of incumbent neighbours.
average apartment rentals
70,000
60,000
Annual Rent (US$)
50,000
40,000
30,000
20,000
10,000
0
1 Bedroom 2 Bedroom
Mid-Range
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 facilities enjoyed
by existing middle income properties, new
buildings with a range of ancillary facilities
are likely to perform particularly well. Overall
benchmarks of building quality and facility
provision now are increasing to meet occupier
requirements. All new apartments targeting
middle income occupiers and above offer
central air conditioning and gas facilities.
Almost 70% have underground car parking
while around 25% provide a health club and/or
gym to tenants. Provision of these associated
facilities is now a minimum benchmark for
new developments in Abu Dhabi.
Colliers International has identified
approximately 14,000 villas and 18,000
apartments that are currently under
construction across the city. Economic
growth and a shortage of supply have
provided the natural stimulus for
development activity in the Emirate. Based
on figures supplied by developers operating
in Abu Dhabi for developments either under
construction or planned, we expect the
supply of residential accommodation units
in the city to increase by approximately
205,000 by 2015.
3 Bedroom 4 Bedroom Penthouse
High-End
 Abu Dhabi office fourth Quarter | 2007

Office • There are few purpose-built primary grade

office buildings in the city, and the bulk of
Abu Dhabi’s office sector experienced them are owned by government or semi-
development in spurts between 1978 and government entities
2007. In recent years growth has not been as • Occupancy rates in purpose-built office
dramatic as witnessed in the early 1980s when buildings are typically around 98%, with
the supply of office space doubled consecutively the balance of space being subject to the
in 1982 and 1983. Since 2000 office supply natural vacancy rate which is associated
has grown by 50% to a total of 460,000 m2 with lease transfers or new tenant fit-outs
of Gross Floor Area (GFA). With a spate • The quality of the city’s remaining stock
of projects under construction and planned, is low with the majority of office buildings
Colliers International anticipates that by in the city of secondary or tertiary grade.
2011, existing office space supply will increase Nevertheless, the finishes of these
by a further 85% to 850,000 m2 of GFA. buildings are generally fair and they offer
functional office space, albeit lacking in
The continuous flow of new organisations modern communications systems, services
keen to establish themselves in the Emirate, and floor plate design efficiency
as well as the natural expansion of existing • Virtually all buildings suffer from a lack of
organisations against the backdrop of benign dedicated parking facilities
The continuous flow of
economic conditions, serve as key demand
new organisations keen
drivers. These factors are further reinforced Our research indicates that approximately
to establish themselves
by the Emirate’s economic diversification 415,000 m2 of office space GFA is currently
in the Emirate, as well
ambitions, and the development of planned under construction across the city. In the
as the natural expansion
industrial, financial and free trade zones. meantime, unsatisfied demand has resulted
of existing organisations
According to statistics supplied by the Abu in average rental increases of over 30% in all
against the backdrop
Dhabi Chamber of Commerce & Industry office accommodation under study between
of benign economic
(ADCCI), there were approximately 60,000 2005 and 2006. There have been further
conditions, serve as
licensed businesses in the city in 2006, increases of around 10% between 2006 and
key demand drivers
growing at an annual rate of 5%. 2007, with the reduction in the average level
forthcoming supply of increase attributable to the government
Colliers International’s comprehensive imposed rental cap. Despite this, Colliers
year GFA (m²)
survey of Abu Dhabi’s dedicated office stock International anticipates rents to continue
2007 24,000
has identified the following characteristics: to rise, until substantial supply enters the
2008 58,000
market from the end of 2009 onwards.
2009 256,000
2010 183,000
2011 250,000

Class A (Primary): Strong location, purpose-built, high quality finishing, central provision of Information and Communications Technology (ICT), Air-conditioning
project snapshot (A/C) and central heating (C/H), good state of repair, available parking facilities.
Class B (Secondary): Strong location, converted use, moderate quality finishing, provision of ICT, A/C and C/H, limited parking facilities
project GFA (m²) Class C (Tertiary): Poor location, congestion and parking constraints, limited or no ICT, A/C and C/H, adequate state of repair, moderate quality finishing

Al Mamoura 24,000 PRIMARY GRADE OFFICE RENTAL GROWTH

Central Market 25,000
400
Al Masood Revelopment 32,000
Annual Rent (US$/m2)

Capital Plaza 25,000 300

Darwish Island City 57,000

200
Al Fahim BTB 40,000

Al Wahda Complex 25,000 100

Prestige Towers 61,000
0
TDIC Offices 37,000 2001 2002 2003 2004 2005 2006 2007

Etihad Towers 65,000

 Colliers International
 Abu Dhabi retail fourth Quarter | 2007

Retail tandem with increases in disposable income

In 2000 there were no destination
retail venues in Abu Dhabi. During the
intervening period, there has been a notable
shift towards the provision of international
standard 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) of 139,000m², followed by a
further 35,000m² at the Meena Retail Park
in 2002. In 2006, Phase II of the Marina Mall
contributed an additional 40,000m² of GLA
to the city’s available retail mall stock. The
opening of Al Raha Mall and Al Wahda Mall
in May and July 2007 respectively increased
the existing supply by a total of 172,500m².
Early indications suggest that these malls
are performing in line with the operator’s
expectations. An additional 46,000m² is
anticipated in November 2007 with the
completion of the Al Khalidiyah Mall.
The new malls have introduced the concept
of convenience shopping in a climate-
controlled environment with the added
benefit of dedicated parking, crèche, and
adequate restroom facilities – marking a shift
away from the city’s traditional ‘high-street’
retailing orientation. This continuing trend
towards one-stop shopping environments, in
over the last decade, has been reflected
in the number of recently completed and
forthcoming retail developments.
In mid-2008, Aldar Properties are expecting
to complete a modern Arabian Souq
(ShopCentral), as part of its flagship Central
Market development. With the addition
of this new offering, it is anticipated that
traditional modes of downtown retail in
Abu Dhabi will change dramatically. This
is in part due to the location of the Central
Market project, at the intersection of the
Airport Road, Khalifa Street and Hamdan
Street. The year 2010 is likely to represent
a watershed for retail market performance in
the city, with Sorouh Real Estate set to open
the Al Reem Mall with 130,000m² of GLA
and the Al Yas development adding a further
300,000m² of leasable area. The leasable area in the
Emirate of Abu Dhabi
The leasable area in the Emirate of Abu is set to increase from
Dhabi is set to increase from 526,700m² at 526,700m² at the end of
the end of 2006 to 1.4 million m² by 2010, 2006 to 1.4 million m²
representing a 165% increase. In 2010, by 2010, representing
Abu Dhabi will have 0.87 m² of GLA per a 165% increase
capita. Colliers International Retail Services
project that in order to support this volume
of retail mall stock, an approximate annual abu dhabi shopping mall
retail spend of US$ 4,900 per capita will be cumulative supply
required. 1,600,000

1,400,000

1,200,000

1,000,000
GLA m2

800,000

600,000

400,000

200,000

upcoming retail locations 0

2005 2006 2007 2008 2009 2010

Al Reem Island Zayed Sports City GCC retail mall gla

15.8% 8.4% per capita
Khalidiya
5.6%
Breakwater 2.50
4.7%
Al Yas Island 2.00
Per Capita GLA (m2)

25% Between the Bridges

3.8% 1.50

1.00
Others
5.7% 0.50

0.00
Riyadh Jeddah Abu Qatar Bahrain Dubai
Dhabi
Al Raha Beach 2000 2010
36.5%

Colliers International 
 Abu Dhabi
In line with the
government’s objective of
stimulating tourism, the
ADTA plans to license the
construction of 17,000 new
hotel rooms in the Emirate
by 2015, of which 45%
would be in the 5* category
hotel performance (Q2 2007)
Occupancy 78.5%
ARR (US$) 221
RevPAR (US$) 174
(Source: HotelBenchmark™ Survey, Deloitte 2007)
forthcoming 4* & 5*
hotel supply
Year Rooms
2007 913
2008 4,114
2009 2,155
2010 1,380
2011 1,600
 Colliers International
hospitality fourth Quarter | 2007
Hospitality
Historically, Abu Dhabi has been
overshadowed by Dubai as a leisure tourist
destination. Demand for hotel accommodation
in the city is driven predominantly by
business tourism, which accounts for 75%
of overall hospitality market demand. In
2006 the Emirate witnessed average hotel
room occupancy rates of 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 for 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 for cultural, sporting,
and Meetings, Incentives, Conferences
and Exhibitions (MICE) tourism segments.
Such initiatives include the provision of
dedicated hotels, resorts, art & culture
venues, shopping malls and other facilities
which aim to capitalise on Abu Dhabi’s
endowment of natural islands, long stretches
of beach, and its position as the UAE’s socio-
political and cultural core.
The recent announcement of an agreement
between Mubadala, a government-owned
future hospitality supply - market share
5*
45%
investment authority, and Formula 1 founder
Bernie Ecclestone that Abu Dhabi will play
host to the prestigious racing circuit from
2010, has been hailed as the first major step
in the city’s efforts towards becoming a more
widely recognised leisure tourism destination.
This has been complemented by the decision
of the world-famous Louvre and Guggenheim
museums to establish Middle East counterparts
on Abu Dhabi’s Saadiyat Island, both
scheduled for completion in 2012.
In line with the government’s objective
of stimulating tourism, the ADTA plans
to license the construction of 17,000 new
hotel rooms in the Emirate by 2015, of
which 45% are in the 5* category. There are
currently 9,500 rooms (including all hotel
categories and serviced apartments) in the
Emirate, with Abu Dhabi city accounting for
approximately 8,000 rooms, with Al Ain, Al
Dhafrah, Mafraq, Ruwais and Liwa providing
the remainder.
Approximately 8,500 hotel rooms are currently
under construction in the city. Increases in
the numbers of visitors to the Emirate and an
expansion in the destination reach of Abu
Dhabi 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 for itself as a business, sporting
and cultural tourism destination.
4*
17.5%
3*
10.7%
Serviced Apartments
26.8%
 Abu dhabi real estate overview fourth Quarter | 2007

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oMAN

Contact information

yeMeN Abu Dhabi

S U DA N PO BOX 47435
UAE
Available market studies Tel : +971 2 445 9898
Fax : +971 2 443 3932
Forthcoming market studies
Gary Brown
Bespoke studies
Director
Consultancy Services
This market overview is extracted from a comprehensive Abu Dhabi real estate market study carried gbrown@colliers-me.com
out in 2007, available from Colliers International UAE for purchase.
Dubai
PO BOX 71591
UAE
Tel : +971 4 355 4177
Fax : +971 4 355 4277
Colliers International is a global real estate consultancy company providing a comprehensive
Ian Albert
range of property services to a broad range of clients on an international basis. Core services Regional Director
include property and asset management; leasing; development consultancy & strategic advisory; Consultancy Services
property valuations and international property investment services.
Eamon Alashkar
Associate Director
Consultancy Services

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