The fundamentals of Abu Dhabi are undeniable. It is the capital of the United Arab Emirates and as such holds the political and legislative power within the country. It is also the largest emirate geographically (at 67,000 square kilometres) and most populated (at 1.7 million inhabitants).

Abu Dhabi is the richest city in the world with a GDP per capita of over $46,000 p.a. This has been buoyed by high oil prices as well as considerable revenues from trade and manufacturing, and more recently a rapidly expanding tourism industry.

Abu Dhabi has also been blessed with natural resources. There is the well documented ownership of thirteen percent of the world's oil reserves, but perhaps less well known, is that there are over 100 natural islands and waterways within the emirate making it a boating and tourism paradise.

The city's roads are laid out in a modern grid system which allows traffic to flow and easily circumnavigate any obstructions that may occur. The ease of movement within the city is a major benefit for local industry and contributes to the relaxed lifestyle of Abu Dhabi.

There is already over $270 billion worth of investment and infrastructure planned for the capital, and with the Abu Dhabi Tourism Authority and Etihad Airways (the national carrier of the UAE) positioning the emirate as a leading tourism destination and business hub, Abu Dhabi is set to transform itself from unassuming quiet achiever, into regional shining light.

In 2005 the emirate had approximately 1,000,000 visitors, which is expected to grow to over 3,000,000 by 2015. In the same time the number of hotel rooms in the city will grow from 8,000 currently to over 25,000. Etihad Airways is also undergoing a rapid expansion with new routes and aircraft, with the Abu Dhabi airport is now expanding to cater for all this growth.

The effect of all the above on the local real estate market will almost certainly be positive. Increasing population growth and tourism numbers will push up rents on both residential and commercial properties. As rents increase, so to will the demand to purchase property in the capital, and with only limited projects due for completion before 2009, the premium on what little supply that exists should be considerable.

Abu Dhabi therefore represents an ideal opportunity for investors who missed out on the Dubai property boom, to have a second chance at entering a growing property market on the ground floor. In addition, for investors who did profit from Dubai's success, they now have an opportunity to further grow their real estate investment in the region without becoming over exposed to a single city. The fundamentals behind the two property markets differ sufficiently to provide a hedge strategy for investors.