Abu Dhabi shows how to open real estate markets

'The government should continue to play a major long term role in making the sector stronger by investing in infrastructure and encouraging the establishment of a secondary market in mortgages.'

In his speech entitled: 'Driving Real Estate Investment in the Middle East: the role of governments in opening up the real estate markets' Mr. Haidar said Sorouh, as a leading real estate developer in Abu Dhabi, had 'witnessed first-hand the tremendous results of a switched-on, visionary government acting to open up our market'.

'We believe that government support is critical to the development of a prosperous real estate market,' he said, citing five areas in which government intervention can have a positive impact: the creation of the right economic and legal environment, legislation to ensure security for investors and buyers, the introduction of structures that exert control, making the investments that create confidence, and introduction of mechanisms to make finance more available and affordable.

'In Abu Dhabi, the government decided that if property development was to take place on a big scale then the best vehicle to do this was large publicly listed property companies. It was able to take advantage of a securities market that was enjoying a boom period facilitating a series of initial public offerings which proved hugely popular.

'This enabled the creation of highly capitalized developers like Sorouh Real Estate and Aldar Properties to carry out the development of Abu Dhabi and I can tell you we take this responsibility seriously.

Government role

'But clearly the Government's role is still a strong one. The allocation of land and the granting of planning decisions on specific projects remains rightly in government hands. Governments need to regulate the sector by establishing guidelines for density, creating open spaces, making sufficient parking mandatory and so on'.

Mr. Haidar cited several other aspects of real estate development that will continue to need government involvement and guidance, including the partnership in building infrastructure facilities. 'If developers have to carry the burden of developing infrastructure on their own, property may become unaffordable'.

The Sorouh CEO said governments must create sound, viable and transparent legislation for investors, owners and other industry stakeholders. In the case of Abu Dhabi, he noted that the government, in addition to creating a new real estate market through legislation, has introduced the legislative framework for the property market to evolve.

'And the UAE Government continues to maintain vigilant on its stock markets and on corporate governance to ensure that investors remain confident.'

Mortgage market

Citing the role played by governments in boosting the real estate market in other countries by broadening the availability of mortgages and making house purchase easier, Mr. Haidar said government support in developing mechanisms to make finance more available and affordable is critical to the long term health of the real estate market.

He also poinyed out that many govdernments are introducing real estate investment trusts. 'Asian countries including Japan, Singapore, Hong Kong, Malaysia, Taiwan and Korea have introduced REITS; The UK, Germany and India are reportedly introducing REITS in 2007', he said.

'I believe that the Abu Dhabi Government has played an exemplary role in the development in the Capital and will continue to support the real estate industry as it develops. It has created a market that is attractive to local and international investors alike.'