Global Arab Network | Property investment - The Maghreb entices UAE's developers

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Property investment - The Maghreb entices UAE's developers

By Deepthi Nair

Wednesday, 14 October 2009 21:50

The Maghreb territory is emerging as the clear favourite and stomping ground for the UAE’s leading developers, or at least for those who can afford to venture into new markets at this moment. It is no coincidence then that the Al Futtaim and Bukhatir groups have committed themselves to signature developments in Morocco and Tunisia, respectively within weeks of each other.

The former plans to derive optimum advantage from going after the mid-low income housing market in Morocco, which will be overseen through its investment arm, Al Futtaim Capital. “Mortgage for the mid- to low-income bracket is readily available in Morocco,

in fact, it is subsidised by the government, which wants to eliminate shantytowns over the next few years,” says Marwan Shehadeh, managing director of Al Futtaim Capital.

“Banks in Morocco are extremely healthy as they were not allowed to invest abroad and over-leverage. The situation is similar to Egypt where banks are in good shape, allowing us to continue with our project.”

Tapping predominantly into domestic demand makes for a sound development strategy in these troubled times for the region’s real estate space. Overseas investors are less keen to invest after having come a cropper when the market took a dive in the UAE, and similar episodes have been played out to a lesser degree in other Gulf markets.

In relative terms, the Maghreb’s real estate markets offer a sense of stability and unmet demand. Al Futtaim Capital has already made a presence in Egypt through the Cairo Festival City, a concept the company has honed to perfection with its flagship development in Dubai. The Morocco project will be financed through the $500 million Al Futtaim Mena Real Estate Development Fund. “The next few years will see land prices scaling down tremendously, making projects more feasible and attractive. But, we are in no hurry to commit funds – we have another four years, and are biding our time to identify opportunities.”

Raising money principally from Asian and Gulf investors until now, the Fund is likely to be opened for further subscriptions after summer. “We are fortunate not to have committed to any projects during the peak,” he says.

“We are now exploring opportunities in Abu Dhabi and Doha, but not hastily. Our expertise and appetite is for mixed-use projects.”

The investment company is also considering markets like Libya and Saudi Arabia. However, the developer feels the absence of their retail brands – such as Marks & Spencer, IKEA, Plug-Ins and Ace Hardware – in Saudi Arabia might dilute the competitive edge. Shehadeh notes: “We are well represented in markets like Abu Dhabi and Qatar, that is our strength. That’s not the case in Saudi Arabia where we will have to compete with local developers and big groups.”

With construction work on track, the upscale cluster in Cairo looks set for completion by 2011. As in Dubai, it will feature a substantial retail component, office stock, schools and showrooms as well. “The construction timeline for Cairo Festival City has not been revised as there is good demand for the units,” the official adds. “Though the market has been affected, the effect on our project was nominal. We are in it for the long-term and are moving ahead without any glitches

Global Arab Network

By Deepthi Nair, Special to (Gulfnews)