The real estate markets in major international cities such as New York, London and Tokyo have received a major boost in confidence following reports that the Qatar Investment Authority (QIA), the emirates’ sovereign wealth fund (SWF), is planning to build up portfolios of investments in prime real estate properties that have been affected by the adverse impact of the global financial crisis.
Investors from the GCC and other countries are particularly interested in value-added distressed assets as real estate companies in these mega-cities seek to off-load prime assets sometimes in panic sales to recoup whatever funds they can. The real estate sectors in these countries have been hit by a double whammy – the credit crunch and plummeting property prices. QIA recently acquired 20% of the listed capital of the Qatari banks on the Doha Stock market in a transaction valued at US$5.3 billion.
Several other factors point to mixed fortunes in the international and Middle Eastern real estate sectors in 2009. Bankers stress that real estate opportunities will vary from country to country; region to region and asset segment to asset segment.
In fact, these real estate market issues, including prospects for Shariah-compliant real estate financing, will all be discussed at the International Real Estate Finance (IREF) 2008 conference organised by ICG-Events along the theme “Building Bridges for Future GCC and UK Real Estate Relations” which is due to be held on the 16th-17th December 2008 at the Park Plaza Hotel in London, UK.
The conference will discuss several pertinent topics and issues including global economic and real estate market dynamics; challenges and opportunities in the UK real estate market; key real estate trends in the GCC countries; structuring real estate products; issues relating to structuring Shariah-compliant real estate transactions; FDI flows into and out of the GCC real estate sector; a GCC real estate market players panel discussion (a first for any such conference) and a Shariah Scholars panel discussion which has always proved very popular at past IREF conferences.
On the evening of the 16th December there will also be a Gala Dinner which will incorporate the IREF ME 2008 Awards of Excellence, which will recognize and honour achievements in the real estate sector in several categories.
The UK has already recently witnessed some GCC activity in the real estate sector with the acquisition of a prime UK portfolio by the HSBC Amanah Global Properties Income Fund, the largest Shariah-compliant open-ended real estate fund in the world. Bank of London & Middle East (BLME) and Gulf Finance House (GFH) are also working on acquiring real estate portfolios in the UK, the latter through the Gulf Atlantic Real Estate Fund 11.
Bankers in London such as Richard Thomas, CEO of Global Securities House (UK) and Chairman of Gatehouse Bank, are confident that the UK market "is becoming investible again and property yields are starting to show investible returns without the need for excessive leverage. I am confident that there will be significant opportunities in the market by the end of this year through to the beginning of 2009."
The UK has always been an attractive market for GCC investors with Abu Dhabi, Qatar, Kuwait and Saudi Arabia leading the way. However, the potential for GCC investment into the UK realty market is much higher than the actual figures suggest.
With some of the real estate markets in the GCC, especially Dubai, contracting because of the impact of the global financial crisis; GCC investors are keen to search for opportunities abroad especially of acquiring bargain prime property assets – both residential and commercial. Citigroup in a recent report stressed that while demand for real estate in Dubai has dropped, the sector “is too important to fail, which explains why supply has been carefully managed while demand was left to the inflows of expatriates and individual investors.”
In Dubai the impact of the new Mortgage Law and Law No.13 of 2008 which regulates initial property registration and allows banks to increase up-front equity requirements for products such as mortgages, will have a further dampener effect as the Real Estate Regulatory Authority (RERA) seeks to curb speculation in the market and to protect banks from any sizeable corrections in the market.
However, yields in the real estate market in general in the UAE, are projected at 8 per cent to 14 per cent for the year ending September 2008 by Al-Mazaya Holding of Abu Dhabi, one of the largest realty investors in the UAE. This figure has a heavy weighting of commercial properties in Abu Dhabi, by far the richest of the UAE emirates.
In Qatar, Barwa Real Estate, the largest realty company in Qatar, in November 2008 announced the launch of its flagship Urjuan Integrated City Development near Al-Khor. The US$10 billion project will be completed by 2013.
In the above context, IREF 2008 could not have been more timely. ICG-Events, the conference organiser, have put together an ambitious and exciting programme and several top speakers have confirmed their participation.
