CPN - September 2008 - (Page 26) INDUSTRY PULSE INTERNATIONAL ing development raises some questions from the demand-supply perspective, healthy returns are still possible for distinguishable, wellpositioned and well-planned products,” especially those targeted toward middle-income segments, cultural-tourism-development concepts and sustainable development, he said. Nicholas MacLean, managing director of the Middle East and North Africa region for CB Richard Ellis Inc., added,“Arguably, the most important are those that will keep the overall economies of the region flourishing.” Among active U.S. investors is The Trump Organization, whose Palm Trump International Hotel & Tower, reportedly going up at a cost of $600 million over 32 months, recently broke ground. It is already achieving healthy returns, said Donald Trump Jr., executive vice president of development and acquisitions for the company, which is partnering on the project with Al Nakheel Properties.“There is a natural ebb and flow going on. … This is not going to be a boom-and-bust type of market.” Turner International, Hines and The John Buck Co. are also prominent players. And Davis reported that U.S. institutional investors, including The Carlyle Group and BlackRock Inc., are diverting some attention to private equity,infrastructure and real estate in the emirate. —Reach international editor Amanda Marsh at amanda.marsh@nielsen.com. Dubai Ups & Downs Upsides Rewards are in line with the risk profile; investors can achieve extremely high returns quickly. Land values in certain areas have almost doubled over the past 12 months; rental rates are increasing across asset classes. Property prices have risen by more than 20 percent in the past two years; capital growth is expected to increase over 15 percent per year. The emirate levies no capital gains, inheritance or income taxes. The dirham is pegged to the U.S. dollar, offering stability. Downsides Many parts of Dubai are off limits to foreign investors seeking 100 percent ownership. Restrictions on land availability have led to high competition, driving up transaction values. Builders import materials, causing prices to inflate. Real estate laws and regulations need greater transparency. A bandwagon investment mentality focuses investors/developers on the historic performance of high-end product rather than demand sustainability. Less scrupulous second-tier developers are building as much as possible to maximize returns, intensifying the risk of a supply glut. A lack of skilled labor, raw materials, electricity, water and drainage spans the market. For more international coverage, visit www.cpnonline.com/international. 26 COMMERCIAL PROPERTY NEWS • September 2008 • www.cpnonline.com http://www.buchananstreet.com http://www.cpnonline.com/international http://www.cpnonline.com
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