Abu Dhabi to relax property ownership rules to encourage more foreign investment

Written by Ray Clancy

Friday, 26 February 2010 09:36

The Government of Abu Dhabi is to relax property ownership rules this year to encourage foreign investment into the emirate.

Mohammed Omar Abdulla, Undersecretary of the Department of Economic Development, or DED, said it is a direct response to foreign investors wanting greater control over their company’s business decisions. At present Emirati nationals own a 51% shareholding in a company while the rest is held by foreign investors.

Abdullah said Abu Dhabi will continue spending on expanding on infrastructure related projects with special focus on the healthcare and education sectors in the year 2010. He said average annual growth could be less than 5 to 6% in the coming years.

According to Abu Dhabi Nasser Al Suwaidi, chairman of the Department of Economic Development, said that the emirate is aiming to increase Foreign Direct Investment by 9% per annum, up to 23% of GDP by 2030 and is seeking to increase non-oil exports to 11% of GDP to reduce volatility.

He admitted that the financial crisis revealed the shortcomings of the regulatory framework and explained that the government has focused on the issues of investment, reform and support to the private sector. He said that the investment climate has been improved in the emirate and better services are now offered to investors.

Al Suwaidi is optimistic on the economic outlook of the emirate despite the uncertain global outlook. ‘We have sound economic fundamentals and favourable long term and short economic indicators,’ he said.

Residential property supply in Abu Dhabi is expected to rise by 17% between now and 2012 and the shortfall in the availability of units is expected to fall from around 45,000 units to approximately 33,000 units during this period, according to the recently published Abu Dhabi State of the Market 2010 report.

It also says that the downward slide in prices and occupancy levels of property units will continue until the issues like overpricing by speculators in the past, super-normal profit expectations from developers, and shortage of mature legislative and regulatory frameworks were addressed.

While rents have declined especially for larger units and low quality or badly located units, it remains substantially higher in Abu Dhabi compared to the rest of the country.

Abu Dhabi’s population is expected to grow by 1% in 2010 and 2.8% in 2011 and 2012. The number of households, local and expatriate, is expected to rise by 6.7%.