Hear some of our speakers share their insight and knowledge on the Middle East Real Estate Sector.
David Cockerton
Fund Manager
SinoGulf and Chairman, RICS UAE
Profile
Q. To what extent do you think regional and international confidence is returning to the real estate market?
Confidence is returning but is still fragmented. Funding new development without proven demand or occupier interest is difficult. Private investors can take a more entrepreneurial view but will also look to secure a higher return if there is more risk attached. Understanding the local market is vital and that is where SinoGulf has a proven track record.
Q. Where in the world would you invest $100m tomorrow?
Real estate investment is typically driven by demand, so potentially KSA because there is a massive opportunity for real estate development especially in residential and mixed-use sectors, and the UAE where SinoGulf have significant experience in real estate development and asset management.
Q. What is your biggest challenge this year and how are you meeting it?
We have just launched International Tower into the Abu Dhabi market. International Tower provides Grade A office space and is the first commercial development to launch within Capital Centre adjacent to ADNEC. Our objective is to now lease the building in the shortest time possible, and this means that we remain flexible in our negotiations with prospective tenants. The building can accommodate most space requirements – big or small. We are just completing the fit out of a number of floors to provide fully fitted office suites which we expect to lease very quickly.
Q. What do you see as the biggest opportunity on the horizon?
With every real estate cycle there is always a recovery. Accurately predicting when this is likely and then being in a position to take advantage of the opportunities presented is our aim. In the shorter term, maintaining investor confidence in premium assets such as International Tower requires vision, leadership and trust. Values that are at the heart of SinoGulf’s DNA.
Q. Which investment strategies are you implementing for 2012?
Within a global market that now exists, investors are offered more choice than ever. But the fundamentals of real estate investment remain the same as ever. Location, location, location. When the risks are greater there is also generally a flight to quality, in both a product and its location. That is why we remain very confident in the future of International Tower.
Q. Which measures are you taking to mitigate risk?
You can’t manage what you can’t measure. Defining and quantifying risk is thus the first step. Understanding which steps should then be taken to mitigate risk depends very much on the risk profile of your investors, your product quality and your market differentiation.
Yusaini Sidek
Executive Director and CEO
Damansara REIT Managers, Malaysia
Profile
Q. What is your biggest challenge this year and how are you meeting it?
The biggest challenge for Al-‘Aqar Healthcare REIT this year is to implement our investment strategies via acquisition exercise in Syariah compliant properties and assets enhancement on existing properties; and at the same time to optimum the gearing level and leverage on its financing in order to provide higher return to our unitholders. Futhermore, this year Al-‘Aqar will conduct its major exercise via refinancing its current Sukuk to a new Sukuk Programme.
We believe with the current strength and support from the government, Al-‘Aqar can easily overcome its biggest challenges and achieved its investment strategies. From year 2006, Al-‘Aqar had increased its property portfolio from 5 assets worth RM 485 million to 25 assets totaled RM 1.36 billion by year 2012. From 25 Syariah compliant healthcares related assets, 22 of Al-‘Aqar properties were located in Malaysia, 2 in Jakarta, Indonesia and 1 asset in Queensland, Australia.
Q. What do you see as the biggest opportunity on the horizon?
In measuring the capacity of Healthcare REIT, only sky is the limit. On the back of critically-ageing world populations, rising affluence, and increasing demand for more sophisticated healthcare attention and infrastructure, Al-‘Aqar Healthcare REIT is set out to be a potential beneficiary of the growing healthcare in Asia with its portfolio of high quality healthcare properties.
Al-‘Aqar has segmented its property portfolio as the healthcare related assets and as to date successfully acquired not only hospital building but also nursing college, aged care and retirement center and not limit to other properties like pharmaceutical assets, nursing homes, medical office and other medical asset management properties.
Q. To what extent do you think regional and international confidence is returning to the real estate market?
REIT provides better solutions to the property owner by unlocking the value of property. Property owner investing in REIT is reasonably profitable as the market capitalisation is still small compared with other more mature markets, allowing more room for development. This also ensures that returns generated are comensurate with the risks involved.
Q. Where in the world would you invest $100m tomorrow?
Will invest in healthcare related assets in any countries that accepting REIT's mechanism to support their business growth. The investment of the assets must generate good return to increase dividend to our unitholders.
Q. Which investment strategies are you implementing for 2012?
We will adopt the same investment strategies and policies practices over the last 5 years via acquisition of composition of syariah complaint assets and to diversify its property by which used for healthcare purposes and leveraging it’s financing to make the permitted investment.
Raeyd Al Dakheel
CEO
Mawten Real Estate Company, KSA
Profile
Q. What is your biggest challenge this year and how are you meeting it?
Our biggest challenge this year is the amount of time invested in getting the authorities permits and presale regulations and their approval process; and we are in a constant dialogue with the different authorities to expedite the process
Q. What do you see as the biggest opportunity on the horizon?
Housing and Hospitality opportunities in some Saudi cities
Q. To what extent do you think regional and international confidence is returning to the real estate market?
Every country is different, in Saudi Arabia, our market research indicates that the confidence level in the real estate sector in weaning due to inflated land prices. Having said that, there are many opportunities still there but a great deal of due diligence needs to be exercised
Q. Where in the world would you invest $100m tomorrow?
In Makkah, Riyadh, or Jeddah; Saudi Arabia
Q. Which investment strategies are you implementing for 2012?
We are concentrating our efforts in 2012 on accomplishing our development goals for the existing projects and adding a few more opportunities
Q. Which measures are you taking to mitigate risk?
Even though the Saudi real estate market have few risk factors; we have been always cautions, we have a risk assessment process in place, and we only take on opportunities with minimal risks
Shrimati Damal
Vice President & Deputy Treasurer
Majid Al Futtaim Holding, UAE
Profile
Q. What is your biggest challenge this year?
Geopolitical uncertainties in the MENA region
Q. and how are you meeting it?
By closely staying in touch with developments/understanding implications for our business, and building in flexibility/mitigants to de-risk our investments to the extent possible. In general, erring on the side of caution
Q. What do you see as the biggest opportunity on the horizon?
Emerging markets, overall growing consumerism/purchasing power in these markets. And while geo-political environment is a near/medium term risk, the longer term implications of a change to democratic system is a huge positive
Q. To what extent do you think regional and international confidence is returning to the real estate market?
This is different country/region wise. For UAE, there is still a significant gap in some sectors of real estate with supply significantly higher than sustainable demand
Q. Which measures are you taking to mitigate risk?
Focusing on strong liquidity, diversified sources of funds and, ensuring smart flexibility both in spending & funding.
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Gurjit Singh
COO
Sorouh, UAE
Profile
Q. What is your biggest challenge this year and how are you meeting it?
2012 is a watershed year for the real estate sector with supply increasing in all real estate asset classes through the completions and deliveries of various developments. The challenge is therefore, timely delivery and being the quickest to the market.
Q. What do you see as the biggest opportunity on the horizon?
The biggest opportunity for real estate developers in the short term is capital formation through professional asset management. This will allow for a recurring income base to be established for a particular property portfolio. In the medium term the opportunity will be to incubate these portfolios into performance grade properties through value accretive strategies to improve the quality and security of the real estate income. For the longer term, the creation of this investible real estate product will give rise to capital recycling opportunities whereby these income yielding properties can be excited through to institutional real estate structures such as listed or unlisted real estate investment trusts or funds or private equity funds. The capital raised through such exits can then be ploughed back into the business of real estate.
Q. To what extent do you think regional and international confidence is returning to the real estate market?
There is gradual improvement in the real estate sectors in very specific areas in the region due to geo-political spillovers as well as government pump priming investments . But these are very sector and asset class specific improvements and each asset class’s gradual improvement is further bifurcated into the quality of the asset class. The hunt is on for yield and investors are looking for stable income assets that can grow the income base on the basis of a stabilized yield.
Q. Where in the world would you invest $100m tomorrow?
For this hypothetical situation, It would be into income yielding real estate which will throw up value accretive opportunities to improve the asset and position it for capital recycling in the mid to long term.
Q. Which investment strategies are you implementing for 2012?
The simple approach being taken is to increase the recurring income base and continue with capital formation.
Q. Which measures are you taking to mitigate risk?
The approach is to be quick to the market to ensure all opportunities are captured from a recurring income perspective. This will mitigate the risk of having voids in the property portfolio that is being completed and delivered. Pre leasing before the completion of the development and focusing on longer term leases are two important aspects of this risk mitigation.