Nearly 60 per cent of construction projects in the Gulf have been postponed or shelved as a result of the global credit crunch, it has emerged.

Sakana Holistic Housing Solutions chief executive officer R Lakshmanan said global confidence was at an all time low as a result of the financial crisis and the region's real estate was bearing the brunt of the slump.

He also warned that because most of the industry's liquidity had come from oil wealth, plummeting crude prices would only increase the impact on companies and investors.

However, Lakshmanan said Bahrain's limited oil reserves and economic diversification to other sectors should help shield it from the worst of the crisis.

'Just under 44 per cent of projects which have been planned (in the Gulf) are under way and that means projects have been cancelled or shelved indefinitely,' he said.

'Some GCC investors are pulling out funds in search of bargains elsewhere and international investors are pulling out funds due to the non-revaluation of the GCC currencies.'

'Oil prices have fallen dramatically from $148 per barrel a few months ago - with talk that it could reach $200 - per barrel to under $60.'

'There are also forecasts that it could go as low as $30 per barrel next year.'

'Most countries have budgeted on $60 per barrel and if the oil price goes lower, then the break-even point is no longer feasible for all the projects under way.'

Lakshmanan was speaking at the first Gulf Real Estate Fundamentals Conference, which opened at the Diplomat Radisson SAS Hotel, Residence and Spa.

Financial experts and business leaders from across the Gulf, Asia and Europe are attending the two-day event, taking place under the patronage of Survey and Land Registration Bureau director-general Shaikh Abdulrahman bin Ali Al Khalifa.

It aims to assess the market, identify potential growth areas, discuss funding options for real estate projects, analyse the role of private equity within the industry and debate risk management practices.

Lakshmanan said as of July this year, $2 trillion worth of construction projects were under way in the Gulf, including $39.6 billion worth of projects in Bahrain.

He said 65pc of all the region's developments were in the real estate sector with the power, construction, petrochemicals, water and oil and gas accounting for the rest.

Lakshmanan said before the crash of the world's stock markets last year, Bahrain's projects market had almost doubled in size since 2005, but was now showing signs of a slowdown.

Cautious

He said buyers were now following a wait-and-see approach and the real estate sector would become more needs-driven, with developments for people who want to live in houses rather than simply buy to let.

Lakshmanan said the fact expatriates were able to buy freehold properties more easily in Bahrain than elsewhere in the Gulf would give the country an advantage over its neighbours.

'We have seen job cuts in the Dubai real estate industry and if that starts cascading down to the entire real estate chain we will have major issues.'

'Bahrain is at a cost advantage in terms of doing business because Dubai is about 40-50 per cent more expensive in terms of retail and costs.'

'In terms of future growth it has a very good opportunity but this depends on the regulators of the market,' he added.

Lakshmanan said Bahrain should strengthen its legislation and regulation of the real estate sector and follow Dubai by introducing a so-called Escrow law to increase confidence in the market.

This will ensure investors in off-plan developments which are under construction or in the pipeline have a guarantee that their money only goes towards the project and certain construction phases must be completed before<