Sorouh's Watani villas project near completion

Emirati housing projects are proving to be an increasingly important revenue stream for property developers in Abu Dhabi.

Fahad Al Ketbi, the chief commercial officer at Sorouh, at the site of the Dh5.4 billion Watani project near Abu Dhabi Golf Club. Delores Johnson / The National

Hundreds of spacious villas are nearing completion on an expanse of land near Abu Dhabi Golf Club.

The villas, which are various shades of desert sand in colour, are neatly laid out as they await the landscaping to be filled out around them.

They are part of the Dh5.4 billion (US$1.47bn) Watani project, which will eventually have 1,372 villas, as part of a push by the Government to offer high-quality modern housing to Emiratis. The villas will be provided free of charge to their future occupants. But for Sorouh Real Estate, which is developing Watani, the revenue generated from developing the project is important, as rents and property values continue to soften in Abu Dhabi.

"We are trying to diversify our income," said Fahad Al Ketbi, the chief commercial officer at Sorouh, one of Abu Dhabi's biggest property developers.

"And on the other hand we are trying to be part of the government initiative to find a better life for the nationals."

Sorouh designed and is building the project, the first two phases of which are scheduled to be completed by the end of this year. Families are expected to start moving into the development by early next year.

The demand for housing from Emiratis is great.

"They have a long list - around 50,000 [Emiratis] - requesting for a house or loan from the Government," said Mr Al Ketbi.

Sorouh is also developing national housing projects in Al Ain and Al Gharbia, and it is competing with other developers to win contracts for more developments across Abu Dhabi, Mr Al Ketbi said.

It has also taken on other government projects, including infrastructure, medical facilities and schools.

Other developers, including Aldar Properties, are also developing Emirati housing projects. Not far from the Watani project, Aldar is building Al Falah, a 4,857-villa development for UAE families.

At the beginning of this year, Abu Dhabi's Executive Council gave the go-ahead for investment in housing in the emirate.

"The Abu Dhabi Government will during the course of 2012 provide a total of 7,608 residential villas for its citizens," it said.

This was in line with long-term planning targets to provide good-quality accommodation for all Abu Dhabi citizens, the Executive Council said.

"It's definitely a big priority for [the] Government right now," said David Dudley, the head of Jones Lang LaSalle's Abu Dhabi office. "There's a shortage of quality housing for the national population and so it's certainly a big push, a big priority for government investments for the next few years."

There are advantages for both the developers and the wider property market.

"I think that by getting the likes of Aldar and Sorouh to do that housing, they will get very high-quality, master-planned communities, which will be really good for the property market," said Mr Dudley.

"It definitely helps the cash flow position of developers like Aldar and Sorouh right now, while the sales market is currently suppressed, then they can enter into development management agreements to build that housing," he said.

"It wouldn't be the same profit margin as doing speculative housing, but it is certain [of] occupation and a certain revenue stream."