Abu Dhabi Commercial Properties is in the process of adding 750 new buildings to meet growing demand.
Hope for Abu Dhabi housing crunch
ABU DHABI // Abu Dhabi Commercial Properties (ADCP) is in the process of adding hundreds of new buildings to meet growing needs for housing. That construction, however, will be accompanied by the demolition of 250 buildings, which will slow the impact that the new flats will have on the total housing market. Dennis O'Connor, the chief executive of ADCP, said that the company is co-ordinating the construction of 750 new buildings to "reduce the increasing supply problem for places to live",adding that there were only two vacancies in ADCP's entire portfolio - the largest in the emirate - of 35,000 flats in 3,400 buildings. "The Government is ramping up its loans for new buildings," he said. "They are trying to build up the housing stock as much as possible."
The new buildings - which add up to about Dh2.9 billion (US$790 million) worth of development - will mostly be clustered in the Tourist Club area, Mussafah and Al Ain, he said. Supply will start coming online next year, with as many as three new buildings a week ready for occupancy starting in January. The catch is that one-third of the buildings will replace older buildings, which the municipality had designated as no longer fit for habitation. The displaced people will be relocated by the Government to alternative housing until the new buildings are constructed.
"Most of the buildings are at least 20 years old, with structural issues," Mr O'Connor said. "The Government has said that they must come down." ADCP, the property division of Abu Dhabi Commercial Bank , was hired earlier this year to take over the portfolio of the Khalifa Committee, a Government division that grants low interest loans to nationals for developing new buildings. The purpose of the loans is to spread the Emirate's wealth, while increasing the supply of residential, retail and office space.
The committee has loaned out a total of Dh35bn since it was founded by Sheikh Khalifa bin Zayed, President of the UAE and Ruler of Abu Dhabi, in 1981, according to a Government website. Mohammed al Khemairi, the executive manager of the Khalifa Committee, said in an interview in April that the Government had allocated about Dh1bn a year for the loans. Still, inflation is posing a serious challenge to the task of erecting new buildings, Mr O'Connor said.
Each national that is awarded a loan and starts construction of new buildings under the program operates as a small developer with his own contractors, consultants and suppliers - meaning that they do not have the ability to pool large quantities of building materials like the bigger developers. "Our landlords are very open to the impact of inflation," Mr. O'Connor said. "It's really a big problem."
David Stewart, the chief operating officer of ADCP, said that construction prices for the company's clients had increased by as much as 43 per cent. It costs about Dh5,600 a square metre to build now, up from Dh3,900 a square metre in early January, he said. Also, the loans to some of the developers were no longer sufficient to meet construction costs. Of the 755 new projects, 33 now have had to get a second, outside loan.
"None had to do this earlier this year," Mr Stewart said. Contractors and property experts have said in recent weeks that rising inflation will result in delayed projects and a whittling down of the number of companies in the market. Mr O'Connor and his staff are working in the meantime to improve the management of the properties in ADCP's portfolio. The company is planning to launch a 24-hour help desk later this year to deal with problems as they arise. He has introduced roaming maintenance teams and opened a brand new office where lease renewals and other paperwork can be processed quickly.
ADCP is also taking on the role of a developer itself, adding about three major buildings a year. The first is planned for the Capital District and will be launched later this year. @Email:firstname.lastname@example.org