The ongoing boom that the emirate of Abu Dhabi is enjoying would inevitably lead to shortage in power and water supply aside from further depleting whatever residential apartments are available at present, industry projections and independent forecasts by analysts said. According to the latest demand projections by the Abu Dhabi Water & Electricity Company (Adwec), the emirate should commission new power and water plant this year as it was earlier expected to suffer a 774MW shortfall in power capacity by 2012. Without any new plants being developed, the shortfall is expected to reach 2,000MW just one year later, it said. At the same time, 46 million gallons a day (g/d) of desalinated water will also be needed by 2013, Adwec added. Moreover, other studies and experts said the UAE capital and its suburbs are suffering from a severe shortage of residential apartments - and the problem is set to continue for at least three years. The said there is a huge gap between the supply and demand of residential units. And they warn that the situation could turn into a crisis next year. A study carried out by Abu Dhabi Chamber of Commerce and Industry (ADCCI) said that until 2005 the market was stable with no shortages. All types of apartment hunters were catered for, from people looking for low-cost units to those seeking upscale luxury apartments. Rents remained level and the number of residential units in Abu Dhabi totaled 287,000 - enough to meet the demand at the time. But in 2006 the population rose and the number of new flats constructed was insufficient to meet demand, leading to a shortfall of 3,000 units. The problem worsened last year when the shortage grew to between 7,000 and 8,000 residential units. In 2007 and 2008, rents for some residential units increased by 140 per cent. The ADCCI report said the shortage will reach at least 20,000 units and this will have an impact on all economic activities in the emirate. The study suggests that new buildings in Abu Dhabi will meet only 20 percent of the shortfall this year, which will probably result in a crisis next year. Most of the units coming on to the market now are designed for those with high incomes while people with medium or low incomes have been worst hit by the high rent. The shortage, according to market insiders, has most affected those earning up to Dh20,000 a month. For many Abu Dhabi residents finding a suitable and affordable residential unit is a huge and difficult task. Keith Miller, director of planning and studies at Adwec, said it takes four years to bring an IWPP on line from when a decision to launch the project is made. This means a decision will be needed later this year, if it wants to build a plant by 2012. In 2007, Adwec forecasted Abu Dhabi would need a total capacity of 14,340MW of power by 2020. In its latest forecast, presented at the MEED Power & Water Conference in Abu Dhabi on March 18, Adwec increased this to 17,469MW. The leap in demand reflects Adwec's incorporation of the Urban Planning Council's (UPC) Plan Abu Dhabi 2030 into its forecast for the first time. The company has also now included demand from the planned Khalifa Port & Industrial Zone in its projections. Prior to the release of the UPC plan, information on planned megaprojects in Abu Dhabi was available only up to 2018. The data from Adwec showed that Abu Dhabi will not have much capacity to spare until a new plant is built. In 2011, spare capacity will amount to 1,742MW, falling to 829MW in 2012. The lack of spare capacity could have a direct impact on the northern emirates, which in 2007 imported 500MW from Abu Dhabi. This year, it expects up to 800MW of power to come from Abu Dhabi. The Federal Electricity & Water Authority (Fewa), which is responsible for power generation and desalination in the northern emirates, signed a memorandum of understanding with the Abu Dhabi Water and Electricity Authority (Adwea) in January. Under the agreement, Fewa will provide Adwea with land to develop projects in the north of the UAE. This could be followed by a power purchasing agreement, under which Adwea will supply Fewa with 2,500MW of power by 2015. Given the four-year lead-in time for any power plant, Abu Dhabi would be unable to bring in the full capacity for Fewa until 2012 at the earliest. Real estate agencies in the capital complain that their businesses have been affected by the shortage and do not foresee stability in the market for years. Another problem is that most new buildings are mixed use and include shopping malls and very expensive furnished apartments - very few 100 percent residential buildings are being developed. The ADCCI said in its report that rents should not be increased for at least two years and there should be a mechanism to set rents. New regulations and laws covering the real estate sector should be introduced and steps taken to restore rents to acceptable levels. The ADCCI report recommends greater private sector participation in the provision of homes for people with lower incomes. It calls for increased salaries for both private sector and government employees to help them cope with growing inflation. And it said companies should be allowed to operate from private villas to help reduce the burden on commercial buildings. It said inflation had to be addressed to achieve a real fall in 2008. Rent increases contributed 40 percent to the rate of inflation and together with fuel were responsible for more than 70 percent. The demand for residential units has been increasing in many prime areas. These areas include the entire stretch of the Corniche Street (the skyline of Abu Dhabi), the whole area between Khalifa, Hamdan and Zayed the Second streets and Khalidiyah. These areas, according to real estate agencies, hardly have any units available for their clients. The situation started deteriorating from 2006 when the city's population started increasing rapidly and old buildings were being demolished and redeveloped. Since 2006, very few new properties in these areas have been developed for pure residential purposes. Other areas of the city where the demand for residential units is growing are the Medinat Zayed Commercial area, Tourist Club and Manasir area next to Khalidiyah. These areas are also facing acute shortage of properties. One of the main reasons of shortage in these areas is that most of the old buildings that supported the market are being renovated and turned into furnished residence apartments, and some leased out to agents who multiply the occupancy and rent them out to groups of bachelors. Abu Dhabi city and its suburbs are currently undergoing major development schemes with hundreds of new properties, including villas, garden houses and residential buildings. The mega projects that are shaping up under Abu Dhabi 2030 Urban Plan include the Al-Reem Island development, the entire Al-Raha Beach stretch, the Port Zayed area, Breakwater area, Coconut Island and several other islands. All the projects completed by 2030 can accommodate a new population of more than a million. __
