Gulf property chiefs urge state support
Abu Dhabi, February 9, 2009
Property and construction executives called for intervention by Gulf governments and the sovereign wealth funds (SWF) they control on Monday to revive regional real estate sectors hit by the credit crisis.
A property boom across the top oil exporting region has fizzled down after a global financial crisis hit lending and led to a decline in property prices.
Several developers are scrambling to raise funds to finish current projects and are scaling back developments while several Dubai-based contractors say they are owed millions of dirhams by state-linked developers and some may face bankruptcy.
"Now there's a role for the government to stimulate the sector as it did with the banking sector. It must stimulate the construction economy," Fatima Obaid Al-Jaber, chief operating officer of UAE's Al Jaber Group told a Meed construction conference in Abu Dhabi.
"We in the UAE have the biggest SWF. A part of it should be invested to move the cycle forward and give confidence to the economy," she said.
Governments in the region have injected billions of dollars to defrost the financial sector as the crisis sent major global economies into recession.
Abdul Majeed Al Fahim, chairman of business and commercial development Dubai Pearl, said many property companies are seeking help.
"Today there is an opportunity for public-private partnerships, opportunities for the governments to step in and be active in the development of the real estate sector."
Dubai residential real estate prices have already lost at least a quarter of their value since peaking late last year.
Echoing similar views, Adel al-Zarouni, CEO of Burooj Properties, a unit of Abu Dhabi Islamic Bank said: "Government spending will be key to take us out of the market sentiment and current issues we are facing."
Even top executives of Saudi Arabia's construction firms said the time is ripe for SWFs to look into their own economies instead of investing outside and suffering losses.
"The Saudi SWF has invested in the Kingdom but we need more. We need SWFs to invest and be able to finance as well as be partners in shareholdings," Khalid Al Zamil, managing-director for strategic planning of Al Zamil Group told Reuters.
Saudi Arabia appeared less hit than smaller neighbours in the region as its larger native population was likely to help sustain demand which has traditionally been higher than supply in many Saudi cities. - Reuters