• Home
• /
• Business

Fail-safe guarantees urged for developers

According to Jonathan Wride, managing director of Capital Partners, a real estate private equity fund, there is a need for continued drive towards transparency and a clear business infrastructure, which are the most important foundations for doing business in the UAE.

In the sectors of investment and real estate, the key factor is trust, whether speaking to investors or the end users. In emerging financial markets such as Dubai, the phrase caveat emptor (buyer beware) must never apply, he says.

Those involved in a deal, whether selling land, developing projects or selling single units, must be responsible for earning the customer's good faith and follow all due diligence in transactions. Without total disclosure at every point of the deal chain, a sustainable investment future is unrealistic, he explains.

According to Wride, developers need to put fail-safe guarantees in place. There is still a degree of scepticism among real estate firms in the West as to the security of investing in projects in the UAE, though this is starting to ease after the new property laws were passed, allowing selected freehold ownership.

As a result, UAE companies have to be extra vigilant on ensuring that their operations and transactions are solid, safe and secure. While Dubai is booming, in the real estate sector specially, they must ensure they meet and exceed customers' expectations to build a sustainable platform for future, he suggests.

Joint venture partnerships, particularly with Western developers, will fast -track best practice implementation and internationally recognised standards, which will, in turn, encourage more investors from outside the region, he says. The new UAE property law provides a framework for foreign ownership in government-approved locations. While this is starting point, he says further legislation is required for the market.

The Middle East currently attracts less than one per cent of the estimated world pool of foreign direct investment (FDI) funds. The AGCC attracted $1.81 billion of FDI in 2003, compared to $7 billion in the wider Arab region.

According to the United Nations Conference on Trade and Development, $480 million of those flowed into the UAE, primarily Abu Dhabi.

Dubai's FDI, which has been growing by 11 per cent on year-to-year basis, is expected to double by 2010 to cross Dh15 billion. Last year, FDI flow into the emirate was to the tune of $2 billion.