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Investors venture back into Gulf region

Wednesday, March 17, 2010

Source: Catherine Deshayes

Institutional investors are streaming through the gilded halls of Emirates Palace and the offices of some of the largest property developers as they study joint-venture opportunities in the region.

Given the present limits on credit from financial institutions and with off-plan sales of homes down sharply, companies such as Aldar Properties and Sorouh Real Estate are seeking new ways to fund their multibillion-dirham projects. Meanwhile, institutional investors see Abu Dhabi and other markets in the Gulf as nearing the bottom of the downturn and ripe for investment.

Philip Blumberg, the founder and chairman of Blumberg Capital Partners, said: "Abu Dhabi is overbuilt and there are a lot of buildings coming on line, but we see opportunities to develop a building here that caters to a niche market."

Mr Blumberg was passing through Abu Dhabi on a regional tour to promote a new US$1 billion (Dh3.67bn) property fund to take advantage of the bottom of the cycle in the US.

Brazil and Oman

In addition to investing in the US, the fund could develop or invest in property in Brazil, Oman and Abu Dhabi, he said. Mr Blumberg said he would want to form a partnership with a local developer and ensure the Government had a stake in the project as insurance in case problems arose.

In the past two years, there has been little investment in the region's property sector by outside funds. Many large investors have retreated from riskier markets during the global financial crisis. These funds also tend to avoid off-plan developments, markets with uncertain legal environments and buildings that cannot be wholly owned.

Andrew Charlesworth, the head of capital markets at the regional office of the property consultancy Jones Lang LaSalle, said: "In reality, only the best-located developments that have a demonstrable demand profile, or those developers with a proven track record and who have put together a well-thought-out and creative investment package that takes into account the risk aversion of investors, are likely to succeed in attracting this type of capital."

Source: www.thenational.ae