Dubai - Property Developers in Abu Dhabi seem to be immune to the current situation faced by the real estate sector - the prime driver of economies in Dubai, Sharjah, Ajman and Ras Al Khaimah.
Most announced projects in Abu Dhabi are currently going ahead as planned.
However, some Abu Dhabi developers have expressed cautious optimism, while others are watching the scenario.
"Everybody has been affected, but next year we have to fasten our seatbelts," Dr Sulaiman Al Fahim, chief executive of Abu Dhabi-based Hydra Properties, told Gulf News in an exclusive interview.
"We believe that most of the end users were on the stock market and losing their money there. Next year they can make the money [back] if they put it in the right places within the real estate sector."
Sulaiman Al Fahim was in the news internationally for brokering the Manchester City football club takeover by an Abu Dhabi investment group last year.
He is the star of reality television show The Hydra Executives.
Al Fahim is well-known as a real estate developer. In 2008, he was awarded the "Outstanding Achiever of the Year 2008" at the inaugural Arabian Property Awards in Dubai. The State of California Senate honoured Al Fahim with the award "2008 Real Estate Developer of the Year and The Outstanding Business and Community Achievements as CEO of Hydra Properties."
In the interview, Dr. Al Fahim has elaborated his views on the current market situation. Excerpts:
Gulf News: We have all heard a lot about the problems with Dubai real estate following the financial situation. How is Abu Dhabi real estate doing?
Dr Sulaiman Al Fahim: Everybody has been affected but next year we have to fasten our seatbelts. But we have to use this time now as it's a good time to buy a property for the end-user, not for speculators. It will be an end-user year and that's why we are starting with Sharjah as it's for end users.
We believe that most of the end-users were on the stock market and losing their money there, next year they can make the money (back) if they put it in the right places within the real estate sector.
And we have to use the lower price of construction, we are saving Dh100 million per tower. This saving should be passed back to the end user, in terms of better payment plans.
What sort of payment plans is Hydra offering clients?
For some projects we are offering 30-70 per cent, some 50-50 per cent, 40-60 per cent. It depends on the project. We have approval for 70 per cent financing for the Hydra Village project but we are negotiating up to 90 per cent. I think 70 per cent is healthy.
How is the mortgage market in Abu Dhabi?
I mean Al Dar and Sorouh already have 80 per cent financing, as they're government companies. It takes time, in six months the market will be back, in Dubai as well. Abu Dhabi is a new market and there is no oversupply. But Dubai is a strong market and there were a huge number of announcements last year, which have now gone down.
In the next few months, all the banks will know which of the announced projects are okay and which are cancelled and the supply and demand situation will become balanced.
I don't know why these companies are firing people. I don't see the reason. If they hired at the right time, I honestly don't see the reason why they're firing them now. Just to show they're hiring? I'm hiring.
How are real estate regulations in Abu Dhabi compared with Dubai? Are there adequate laws in place to protect investors and their money?
Sometimes regulations start hurting the market. So most of the investors ran away from Dubai with the Rera regulations. They don't like to be tied up with [things like] escrow accounts.
But don't you think such regulations make everything much safer?
Not really. Because speculators made their money from pre-sales and some investors want their money in everything. They are short-term investors. It's an open market and you can't kill the market by putting regulations on everything. Either it's an open market or it's not.
It's up to them whether they lose money or make money. Having an escrow account is fine but having it [closed] is wrong. What if I need the money? What if I want to buy another property and want to sell it? You cannot close the market.
There should be a government announcement in Abu Dhabi and Dubai and the whole of UAE on how they will support the private sector - not just in real estate but everything. Stock prices are going down, property prices going down but gasoline prices is still high, food is still high.
There's no real government initiative for this. If everything is going down, prices should come down too.
How do you see the property market in Abu Dhabi and Dubai over the next 12 to 18 months?
The good thing with the UAE and Dubai and Abu Dhabi is the leaders. We have good leaders and good vision and it's too good to fail. His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, is the real asset of Dubai and he has a great vision.
I honestly don't believe that there is a difference between Abu Dhabi and Dubai.
Because of the Abu Dhabi vision for 2030, everybody has stuck to the plan and there isn't over-constructing. The Abu Dhabi Government went through recession in 1981 and 1997, so they understand recession.
In thenext few months, all the banks will know which of the announced projects are okay and which are cancelled and the supply and demand situation will become balanced."
By Suzanne Fenton
© Gulf News 2009
