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Cityscape Faces Challenge of Reviving Investor Confidence

ABU DHABI - Reviving investor confidence will be the major challenge in this year’s edition of the mega property show Cityscape Abu Dhabi 2009 which opens today at the sprawling Abu Dhabi National Exhibition Centre.

The real estate industry across the globe and in the regionis currently located in a startlingly different landscape from where it has been during the previous edition of the event last year.

The investor confidence in the industry was at its zenith then. Apart from the developers, contractors, building material manufacturers and the genuine investors, the speculators and amateur investors also had contributed to the creation of an aggressively buoyant atmosphere at the lastedition of the Cityscape.

But the scenario is entirely different during this year’s event. The financial crisis has cast a pall of gloom over the real estate industry across the globe, and in the region.

“The investors are by and large adopting a ‘wait and watch’ attitude despite the various stimulus measures announced by the government,’’ said Dr Daniele Seraphim, the Chief Operating Officer ofthe developer Tamouh.

“We hope Cityscape willkick start the revival process in the real estate industry in Abu Dhabi. The fundamentals of Abu Dhabi are strong as there is a huge demand-supply gap in the property sector. Abu Dhabi also has huge cash reserves. We are optimistic that industry will start recovering soon in Abu Dhabi,’’ she added.

“The major challenges are quite obvious—the global financial crisis has a knock on effect on the way the real estate business is being done. But there are numerous opportunities for those who have developed a niche in the property industry. Going forward we will see developers being customer-centric,” said Gurjit Singh, Chief Property Development Officer of Sorouh Real Estate.

“Investors and buyers confidence is the main challenge facing the sector today,’’ says Wael Tawil, Chief Executive Officer of Baniyas Investment and Development Company.

Pointing out that this is the first major gathering for Abu Dhabi real estate players since the onset of the crisis, Dr Hani Shammah, CEO of Bloom Properties, said Abu Dhabi had been less affected than other markets by the crisis, and Cityscape Abu Dhabi will be key in communicating this to all key stakeholders. The success of the event will in turn reinforce the credibility of the real estate sector in the emirate.

“The main consideration to take into account at the moment is the availability of liquidity,’’ he said, adding that there was now a discernible shift away from a speculator-driven market to an end-user market in the release estate sector in the emirate.

The developers in general were urging the banks to be more liberal in lending to the property sector. Several of them have tied up with the banks to announce innovative financing packages like zero per cent interest loans, enhanced loan provisions up to 80 to 90 per cent of the property value, and extended repayment periods.

“Having the right product, price and payment term is the most essential part of the sales equation blended with end users financing schemes,’’ said Tawil.

Quoting the study by Jones Lang Lasalle,Tawil said Abu Dhabi wouldbe the highest performing real estate market in the Middle East and North Africa over the next 12 to 24 months. “A balanced growth story to date, vast oil wealth and a relative under supply of housing and other asset classes makes the emirate the most attractive investment environment of all the major markets in the region,” he said.

Some of the developers have decided to pass on the benefits of the fall in prices of the construction materials to the customers, while several others are known to be seriously weighing the practical prospects of such proposals.

Dr Shammah had earlier suggested granting of property rights to expatriates will be an important step to revive the real estate market from the crisis it is currently trapped in.

Cityscape Abu Dhabi is also set to be a barometer for the future health of the multi-billion dollar real estate industry as a whole as this is the first in a series of similar major business to business meets in the property sector to be held in different parts of the globe this year.

· ramavarman@khaleejtimes.ae