UAE construction and property stocks rose on Wednesday after the Abu Dhabi Crown Prince revealed a three-year, Dh50 billion stimulus package and 10 initiatives that will ease business, create jobs and boost growth.
The Abu Dhabi Company for Building Materials or Bildco rose 7.27 per cent in Abu Dhabi, while the emirate’s biggest real estate developer Aldar gained 1.5 per cent, helping the overall index increase 0.77 per cent. In Dubai, contractor Arabtec climbed 3.9 per cent.
#DFM Top Gainers of the day: ARTC up 3.94%, AMLAK up 3.71%, AAN up 2.73%
— DubaiFinancialMarket (@DFMalerts) June 6, 2018
Included in the ten initiatives is a comprehensive review of building regulations for both private and commercial property construction, to reduce costs for developers and encourage urban development, according to the announcement late on Tuesday by Sheikh Mohammed bin Zayed.
Today's front page: Crown prince announces Dh50bn economic stimulus for Abu Dhabi https://t.co/0lkBgYbRh0 pic.twitter.com/Wu9exlxAkn
— The National (@TheNationalNews) June 5, 2018
The stimulus package and other measures will help boost economic growth in the emirate, increase consumption, bolster small and medium-sized businesses, and relax regulations for businesses. These initiatives follow other steps aimed at propelling growth in the emirate by buoying the non-oil sectors. Abu Dhabi announced last month measures to waive certain administrative fines for companies to increase the competitiveness of the emirate.
"The creation of jobs and improving business environment may further drive private investment and job creation which in turn is likely to provide some support for the commercial and residential real estate sector," said Taimur Khan, senior analyst at consultancy Knight Frank.
The initiatives also include the creation of at least 10,000 new jobs for Emiratis in both the public and private sector, with an emphasis on promoting partnerships between the two sectors, and establishing them by the end of the year.
________________
Read more:
Sheikh Mohammed bin Zayed announces new social support programme
New housing plans will help make Abu Dhabi 'number one globally' for home ownership
Abu Dhabi's new Maan platform will channel volunteering to where it's most needed
________________
"Jobs boost demand for property and fuel the real estate sector,” said Ben Crompton, the managing director of Crompton Partners Estate Agents. “An announcement like this will greatly improve sentiment and mean that people will feel much more secure investing in an asset like a home. Investors will be enticed back with the prospect of capital gains."
Abu Dhabi’s residential real estate sector has been sluggish over the last three years amid tepid demand, an increase in supply, job cuts and lower housing allowances.
Rental values for the commercial and residential property sector have decreased 13 per cent and 10 per cent respectively in the year to the first quarter of 2018, according to Mr Khan.
Meanwhile, residential sales have fallen by 7 per cent over the same period.
The commercial sector is set to be a key beneficiary of the stimulus package and other measures, which include: instant licensing for most commercial license types and all Government services; new speedy payments for private sector contractors and a review of fines incurred by delays they cause; a cost-cutting review of building regulations for infrastructure, residential properties, commercial and industrial sectors.
“The encouragement of private and public partnerships and collaborations is something that has been widely anticipated and benefits not only the emirate but also the investment market,” said Simon Townsend, Senior Director of Strategic Advisory at consultancy CBRE Middle East.” It potentially opens up investment grade opportunities to not only support and grow local and regional businesses, but also encourages institutional foreign capital adding to the attractiveness of Abu Dhabi as an investment destination going forward.”
I’ve instructed to accelerate the settlement of due payments on contracts for the private sector, to review all fines for the healthcare, education & municipalities’ affairs sectors, and to form a committee by the Executive Office and the Department of Finance to oversee this.
— محمد بن زايد (@MohamedBinZayed) June 5, 2018
Companies already operating in Abu Dhabi free zones will be offered dual licences that will allow them to also operate outside the free zones, and to compete for Government tenders.
“The ease of doing business is critical to Emirati and foreign companies and so this is integral to the next phase of growth in the Emirate, along with the speeding up of payments by government departments as this along with VAT is proving difficult for companies to manage their cash flow,” said Mathew Dadd, head of commercial Agency and Leasing Abu Dhabi at Knight Frank.
____________
The 10-step stimulus plan
