Construction & Real Estate

Qatar to be largest overseas property investor in 2010

Qatar is expected to be the largest source of global real estate capital during 2010, real estate consultancy Jones Lang LaSalle said in a report. The country, which has emerged as "a new global powerhouse," is expected to rank as the number one global overseas investor in 2010, according to the firm. "Cash-rich and with a strong appetite for splashy overseas assets, Qatari vehicles have lately outshone their counterparts from the region and are projected to carry on with their rapid expansion across the real estate world," the report said. Recent investments - such as the purchase of London department store Harrods in May for around 1.5 billion pounds - are likely to be followed by further investments in other markets across Latin America, Eastern Europe and Asia, it said. "Qatar is the epitome of energy-rich GCC nations, with a large appetite for real estate investment, fuelled by the rapid growth in oil and gas revenues over recent years," the report said. Qatar's competitive advantage will be helped by the decline in investment from German funds, which were among the major global investors in 2009, the report said. Qatar, the world's largest exporter of liquefied natural gas, was one of the fastest growing economies worldwide in 2009. Its economy grew at an average pace of 17.4 percent over the past five years and it is set to largely outperform fellow Gulf oil producers such as Saudi Arabia and the United Arab Emirates in coming years. A Reuters poll in April showed that Qatar's economy was likely to expand by 16.1 percent this year.

Egypt's SODIC to buy 50 pct of Syrian developer

Egyptian developer SODIC will buy a 50 per cent stake worth US$40.5 million in Syrian real estate developer Palmyra, the bourse said, adding to a growing list of Egyptian firms interested in Syria. Syria has been attracting attention as the authorities have taken cautious steps toward economic liberalization including opening up the banking sector to more foreign investment. "The company (SODIC) will carry out investments worth US$40.5 million to acquire 50 per cent of Palmyra," Egypt's stock exchange said in a statement. Among recent Egyptian entrants, investment bank EFG-Hermes said in March it would launch a US$250 million to US$300 million private equity fund in Syria to take advantage of the government's recent efforts to liberalize the economy. Egypt's El Sewedy Cables runs a factory in Syria, and mobile firm Orascom Telecom's chairman said this month he was interested in returning to the Syrian market, which he had previously exited. State-owned Bank Misr said this month it has received approval to open in Syria. SODIC is Egypt's fourth largest developer by market value. It sells mostly high-end residential and commercial property on the outskirts of Cairo.

Amwaj starts US$238m housing, hotel project in Iraq

Iraqi-run Amwaj International unveiled a US$238 million housing and hotel project in the heart of Baghdad, as more firms seek to invest in the war-damaged country thanks to an improvement in security. Iraq, badly hurt by decades of war and sanctions, is trying to lure foreign investors to help rebuild its shattered infrastructure and boost employment. "Baghdad Gate", one of the first tangible real estate investment projects in the capital, will be built on 25 hectares (62 acres) of land and include a five-star, 25-storey hotel, large shopping mall, office tower and 3,000 residential units. "The project is being built on prized land, so we chose to make it very distinguished and of a high-quality. It will not be less than any project in the Gulf or even in the world," Amwaj International Chief Executive, Namir El Akabi said. "We cannot deny that there is no full security in Iraq, there are difficulties ... but these projects will help in improving the security situation." While overall security has started to improve in Iraq, bombings are still common and an inconclusive election in March, which produced no outright winner has fuelled concerns of a return to sectarian violence and a rise in insurgency. Akabi said he believed the real estate project would assist in quelling the insurgency unleashed by the 2003 U.S.-led invasion by providing 2,500 direct jobs for Iraqis and another 20,000 indirect job opportunities.

Funds boost for major projects in Bahrain

Bahrain is pumping millions into pushing ahead with development and infrastructure projects across the country. The Works Ministry has already spent almost a third of its record BD214 million budget for this year. It was originally allocated BD55 million last year, which was later increased to BD95.7 million, in an effort to beef up the country's roads and sewerage infrastructure. Ministry under-secretary Nayef Al Kalali said as well as already spending 32 per cent of the budget, a record 55 per cent of the BD129 million budget for client ministries had also been utilized. "We have had these major utilizations of the budget in the first five months of this year," he told the press. "Committing this kind of money in the beginning of the year, when we have had a record budget, is a significant achievement. The 2010 budget, which has been the largest in the history of the ministry, reflects its position as a leader in its field and highlights its integral role in contributing to Bahrain's development." Mr. Al Kalali said the achievements were across all of the ministry's projects including those managed for client ministries. "This progress on critical works in all sectors reflects our commitment to developing Bahrain's infrastructure for the social, economic and environmental benefit of the people and in achieving the 2030 Economic Vision," he said. Major projects already underway include the Isa Town Gate Interchange, improvements to roads and avenues across Bahrain and completion of the Zallaq Bridge to the Bahrain University entrance.

Kuwait: Changing landscape

Demand for commercial real estate took a major hit in Kuwait during the financial crisis as corporates looked to downsize operations and cut costs. As the economy rebounds and with a number of major office developments slated to hit the market, analysts predict prices will continue to soften as supply is set to outpace demand for the coming few years. In 2009 the average transaction price for the commercial sector declined by 15.8 per cent from 2008 levels, according to figures released by Global Investment House (GIH). Meanwhile, the rental rates for office space in the central business district (CBD) nearly halved, falling from a peak of KD14 (US$48) per sq meter to around KD7 (US$24) per sq meter. According to Rawaf Bourisli, the general manager of Action Real Estate, "Many offices in the CBD are at half-occupancy and rents are falling dramatically from the heavy competition to lure tenants. In a way, this is needed, as prices had to normalize from the extravagant levels they were at in the past." Indeed, while the sector has taken a major hit, one positive offshoot from the downturn is that it could lead to the rationalization of a sector that had, according to many, grown out of control during the real estate boom that preceded it. With surging property prices in the middle of the decade, many new investment firms formed looking to capitalize on the situation. In turn, Kuwait's investment sector, and accordingly the financial sector, which provided funding, became overly exposed to real estate. According to Abdulaziz Al Nafisi, the investment group head at Salhia Real Estate, "We will see a market correction and the phasing out of newly formed investment companies that operated as 'single-project' real estate companies with no operational assets. These companies got funding during the boom, but will not be able to anymore as lenders are being very selective and only extending credit to seasoned developers with a track record, a diversified portfolio and market reputation." With work on a number of office tower developments resuming, it is estimated that by 2011 new commercial complexes could add an additional 500,000 sq meters of capacity to the existing 1.2 million sq meters of floor space available in the CBD. As a result, companies currently renting spaces are anticipated to exploit the supply excess by shifting to attractive deals in the newly opened and best-designed developments, which come with sought-after facilities such as parking and extra services. As a result, older "class B" developments will increasingly face vacancies once existing tenant deals expire. According to Salhia's Al Nafasi, "New huge office complexes continue to be built and the anticipated supply of new office space in the next few years could sustain the market for a period of 40 years. Yet there is no net uptake of new companies to match this new supply." (Source: OBG)

QIB signs Istisna'a agreement to fund Al Khor

Owned by Al Khor & Dakira Schemes & Services, the development in the north of Qatar is expected to be completed in just over two years. UAE-based Construction & Reconstruction Engineering Company has been assigned as the construction contractor for the project, and Arab Consulting Bureau will deliver the consultant engineering services. The Al Khor project will provide residential accommodation comprised of 145 villas and 252 apartments of varying configurations. Also to be constructed as part of the project are a children's nursery and a swimming pool, as well as a shopping mall and associated parking lots. Salah Al Jaidah, QIB's Chief Executive Officer, said, "Our involvement with projects such as this Al Khor development is born out of QIB's compelling and ongoing commitment to Qatar's economic development, one of the four interrelated pillars underlying the Emir's 2030 Vision. We are both proud and excited to support such an outstanding undertaking which partners QIB with leading companies in construction, design and project management, and denotes our enduring support of Qatar's construction industry." General Manager of QIB's Real Estate Group, Salah Al Hail added, "This real estate project at Al Khor is one of the biggest in Qatar since the economic and financial downturn in 2008, and will play a key role in satisfying the high demand for quality residential developments in Qatar's northern area."

US$1.3tn of un-awarded construction projects in GCC

The GCC has more than US$1.3 trillion worth of announced and un-awarded projects and a further US$1.4 trillion worth of schemes in the Middle East despite the impact of the global downturn, according to new data. The analysis from MEED Projects also indicates an uncertain outlook for the UAE construction sector with more than US$425 billion worth of construction and infrastructure projects put on hold or cancelled since the start of the market downturn in the fourth quarter of 2008. Of these, just under US$300 billion are located in Dubai, compared with its neighbor Abu Dhabi that has seen close to US$49 billion worth of projects postponed or cancelled.

Kuwait: Housing help

As the domestic economy starts to rebound from the impact of the global financial crisis, Kuwait's residential property market is starting to show signs of recovery. However, despite improving sentiment and market confidence, Kuwaiti developers and analysts cite a lack of access to land as a constraint on more rapid growth. To alleviate pressure on borrowers and encourage lending, the Central Bank of Kuwait has cut interest rates dramatically during the economic downturn (with the discount rate having been reduced six times between October 2008 and February 2010 from 5.75 basis points to 2.5 basis points). Cheaper borrowing terms for housing purchases, combined with renewed consumer optimism from an announced government economic stimulus plan, have caused residential retail sales from January until March to soar by 130 per cent on the same period a year earlier, according to figures released by NBK. While residential property purchases are on the rise, there still remains a significant housing shortage in the country, in particular in the area of guaranteed public housing for Kuwaiti nationals, where there is still a waiting list in excess of 90,000 units. In February 2008, laws no. 8 and 9 were passed restricting banks and investment holding companies from owning, mortgaging and trading in residential buildings and land. At the time, the rationale behind the move was to prevent housing prices from escalating to unaffordable levels based on perceived speculative behavior on the part of banks and investment firms. But according to most developers, the law has not served its intended purpose, mainly due to a lack of land being extended to the private developers and inflexible laws limiting their overall participation. According to industry players, the government is not able to adequately develop the nation's housing requirements alone. And in turn, by limiting the private sector's role, demand is outpacing supply and housing prices remain disproportionately high. Khalid Faisal Al Mutawa, the chairman and managing director for Dar Al Dhabi Holding, a Kuwaiti-based developer with projects across the Gulf, told OBG, "Some 95 per cent of the land in Kuwait is held by the government, and the result is that, with little land to develop, housing prices have reached nearly the same level as one would find in Tokyo and London."

Moody's voices concerns over Gulf property oversupply

The supply-demand imbalance remains a key driver of the continued negative outlook for the property industry in the Arabian Gulf, Moody's Investors Service said in a new report. The negative outlook reflects the rating agency's view of fundamental credit conditions in the industry over the next 12-18 months. "The supply-demand imbalance in commercial property and to some degree in residential units, depending on the city or country, is likely to grow worse as vast supply meets slack demand and is a major driver of our negative outlook," said Martin Kohlhase, author of the report.

Noor Oman Realty launches in Muscat in anticipation of local market 'boom'

Noor Oman Realty, a full-service real estate services company has launched to offer commercial and residential sales and leasing, property and strata management expertise, business and asset valuations and SME brokerage to Muscat. The establishment of the company, which boasts a paid up capital of OR500,000, is indicative of the emerging real estate market according to the company's management.

Saudi approves over US$10.6bn in new projects

Saudi Arabia has approved over US$10.6 billion in projects in the first four months of the year, the OPEC kingpin's foreign minister said. The approvals of some 652 projects valued at SAR40 billion (US$10.67bn) underscores that the oil rich nation is continuing a policy of spending heavily on infrastructure projects to cushion its economy from the effects of the global economic crisis. Last year, the kingdom spent US$33.83 billion in project investment, an amount it is now on track to surpass. Officials have said US$400 billion in mostly infrastructure investment are slated through 2013. The increase in investment on infrastructure, industry and other services "will major new opportunities for the private sector," Finance Minister Ibrahim al-Assaf said at the start of an economic conference in the capital. Al-Assaf said spending on infrastructure in 2009 in the kingdom, which sits atop the world's largest proven reserves of conventional crude, was 37 per cent higher than the previous year. While Saudi Arabia relies overwhelmingly on oil exports to fuel its growth, the country has been pushing to boost the role of the private sector as a means of diversifying the economy. The country is projected to run an almost US$19 billion deficit in the current fiscal year, largely as it has ramped up spending on developing its economy and boosting services.