Real estate firms in the GCC looking to attract investment must increase transparency and public disclosure, said an industry expert.

'Real estate companies with highly regulated and transparent corporate governance policies can take a leading edge over competitors on the capital markets, attracting a premium on shares of up to 40 per cent from investors,' remarked Dr Abdullah Alabdulgader, the founding executive director of the GCC Board Director’s Institute.

Alabdulgader was a headline speaker at the Middle East Real Estate Summit held recently alongside Cityscape Abu Dhabi at Abu Dhabi National Exhibition Centre.

A feature of Cityscape Abu Dhabi, the summit brought together the biggest names involved in regional real estate investment, development and financing.

“The financial crisis that hit the markets a few years ago has made clear the growing significance of good corporate governance in capital markets as it plays a key role in achieving strong and sustainable growth,” he stated.

“Good corporate governance has to be perceived as a big opportunity for the real estate sector to improve its public image and to become better managed.  It can be a source of competitive advantage, and therefore play an important role with investors, lenders, and developers,” the expert noted.

As per Dubai Land Department data, GCC residents had invested $3.26 billion in the emirate’s real estate sector last year, while transactions increased by 20 per cent from 2010, to the tune of $38.9 billion.

Alabdulgader pointed out that investor confidence in the region had improved, but also highlighted the importance of the government regulatory framework.

“Investors in the real estate sector are looking for transparency, that goes beyond financial reporting and includes executive compensation, board member’s qualification. Numbers also show that investors are willing to pay a premium on shares of up to 40 per cent for companies with highly regulated corporate governance strategies,” he explained.

Alabdulgader said increased investor confidence was not only reflective of a company’s good corporate governance practices, but also the factors of the regulations’ framework, which is a prerequisite for the development of sustainable capital markets.

“There has been a great improvement in corporate governance in the GCC region in the last few years. I believe that corporate governance in the region is now in its second stage of development. Following the CG codes initial adoption in 2005 we are witnessing greater acceptance of these codes even among non-regulated companies,” he stated.

A panel of more than 35 industry leading speakers currently active in the Middle East shared their collective experience and discussed ways to tackle the major challenges facing the regional real estate sector.-TradeArabia News Service