Dubai has come a long way. The much circulated photos on the latest projects in the offshore center, from barren desert in the early 1990s to the largest hotels, theme parks and tallest skyscraper by 2009, show the massive scale of development taking place.
Middle Eastern developers such as Nakheel, DP World and Arcapita have all made their mark on the global property development scene with their flamboyant structures, massive Sukuk issuances and billion-dollar developments. Realizing this, international firms have jumped on the bandwagon.
This week itself, firms such as Baker Botts, Allen & Overy and BNP Paribas Real Estate have set up dedicated teams in the Middle East to tap the market for Gulf-based property. Seeing as developers are flush with cash, now’s the time for advisory firms and banks to carve their niche in the booming market. Real estate funds are also mushrooming week to week, with the latest being the US$300 million Global Real Estate Ijarah Fund between International Islamic and Global Investment House.
BNP Paribas’ Real Estate team will cover four business lines, which ultimately aim to facilitate investments from Europe into the Gulf. They are: property development, which developed over 250,000 sq m of office buildings, 200,000 sq m of logistic buildings and 2,000 residential units in France in 2007; property management, with more than 21 million sq m of commercial property under management in Europe, and more than 30,000 residential units in Europe; asset management with more than EUR7 billion (US$10.7 billion) under management; and brokerage, advisory and valuations with Atisreal, placing over seven million sq m of commercial real estate, and over 86,000 valuations carried out in Europe.
Law firm Clifford Chance also lost its real estate key partner Arthur Dyson to Allen & Overy (A&O)’s London-based real estate finance team to mobilize the firm’s Mideast interests. The move comes following news that A&O plans to launch an international real estate team out of Dubai from the end of this month, with a view to targeting Middle East-based investors. The practice will focus on real estate funds, joint ventures and acquisitions.
Abyaar Real Estate Development is also set to sell up to US$1 billion in Sukuk to finance its expansion into Asia and the Gulf. It is in talks with Merrill Lynch to issue Sukuk worth US$500 million to finance projects in Dubai.
Abyaar is planning a secondary listing in Dubai this year, and is negotiating with NBD Investment Bank, a unit of Emirates NBD, to issue Sukuk worth between US$300 million and US$500 million. However, a time frame has not been set.
It will indeed be interesting to see what crops up in the coming years, with more developers and international firms having a hand in the Middle East project finance and development pie.
By Nazneen Halim