Get real, Part II
With the grinding halt of the real estate rollercoaster, exhilaration at the prospect of a ‘fast buck’ is over. What’s next for the industry? Part II
October 31, 2009 6:55 by Ehtesham Shahid
Opportunity in adversity
There is no denying the opportunities beneath the gloom. The consulting firm A.T. Kearney says it sees definite opportunities for GCC-based and managed Real Estate Investment Trusts (REITs) and similar types of investment funds to attract billions in foreign direct investment into the region’s real estate markets.
“REITs are a great way to bring liquidity to the market, which is particularly needed in a depressed market with distressed investors, a situation the local real estate market faces at present,” says Dirk Buchta, Kearney Middle East’s partner and managing director. There are other vehicles available, but public REITs are traded on stock markets, making them transparent and more liquid than other forms of real estate investment. More than 20 markets worldwide have REIT regulation, including Dubai (since 2006), which has helped fuel REIT growth with a current global market cap of $700 billion.
From the look of things, the industry still has to close the gap between normality and the bubble – and the signs are not very encouraging. Cityscape, the real estate exposition which for years served as a barometer for the industry, was marred by some high-profile desertions this year. Giant master-developers Nakheel and Emaar initially decided to skip this year’s event – scheduled to run from Oct. 5 to Oct. 8 – and then had a change of heart. Both firms – the market movers in more ways than one – announced they would indeed make an appearance and once again display their projects.