Wednesday, September 24, 2008

Majority of investments in the GCC region flows into property sector

About 50 percent of all investments in the UAE, and the rest of GCC region, goes into the property sector, as against just 30 percent in other Arab states, noted a development expert.

Also, it should be pointed out at this juncture that the Gulf is not subject to the risk of sub-prime crisis, such as that experienced in the United States, said Dr. Refat Abdelhalim Alfaouri, Director-General, Arab Administrative Development Organization (AADO).

Speaking to the media, Dr. Al Faouri, said any crisis would be the result of an excessive supply of residential units, and political problems, which could lead to possibility of instability in the region.

These factors are not predominant in the UAE and other GCC states, right now, as the states are enjoying security and political stability. Also, the gap between supply and demand of residential units is still large.

The AADO, on monitoring the currently flow of investments into the Arab world's property sector, noticed that about $90bn worth of total investments flowed into the real estate sector each year.

The best areas for investment in the Arab World currently are gold and real estate, both of which, offer safety and stability. The property sector has several benefits, the most prominent of which is the availability of large amount of capital, due to huge increase in prices of oil and high demand for residential units due to growth in population in the Arab countries.

But, shortage of skilled manpower to run properties, and weakness of laws governing the industry and property finance institutions are few of the challenges faced by realty sector.
A study by the Abu Dhabi Chamber of Commerce and Industry (ADCCI) reveals that projects in excess of Dh.1.300 trillion are underway and will be implemented in Abu Dhabi in the next few years. This includes construction and property ventures worth more than Dh.752bn.

The construction boom in Abu Dhabi and several other parts of UAE has helped boost the value of the sector over the past couple of years. The contribution to the gross domestic product of the country has increased from Dh.25bn in 2002 to Dh.45.5bn in 2007, and is expected to touch a maximum of Dh.53.3bn this year.

The property sector contributes an approximate of 6.5 percent of the nominal GDP of the UAE, and about Dh.697bn in 2007.

1 comment:

sunil said...

this post was made in sep. the crisis talked about in this post is already apparent today in jan, 2009. real estate is only a good investment until you have a growing population and strong job market. most of these countries do not naturalize residents, so eventually residents will leave. what is the incentive for being away from home when there are no jobs and no benefits from the government?