Low real estate prices could put the GCC, and specifically the UAE markets back on track for attracting foreign investors, who are already interested in the region for its other advantages, says a report.

Since the beginning of the economic crisis more than a year ago, most real estate markets—emerging and mature—have seen plummeting prices, as much as 40 to 50 per cent in some Middle East countries, according to a report from A T Kearney (ATK), a leading global strategic consulting firm.

ATK recently published its 2010 Real Estate Global Opportunity Index, which is designed to help property developers decide where to expand outside of familiar markets.

Focused on emerging markets, the index weighs real estate development potential, based on construction spending and growth, and risk avoidance, a combination of a country’s risk and the ease of doing business there.

Recently, conditions in most emerging markets seem to be improving, thanks to government stimulus, infrastructure investment and a resumption of lending, said the report.

Gulf oil reserves, amounting to more than $5 trillion, give the area ample financial strength, and the region’s lifestyle, particularly in the UAE, is attractive to foreign companies, the report said.

“The countries of the Middle East and North Africa (Mena) continue to improve in the index, even as they are hit by the economic crisis,” said Dr Dirk Buchta, partner and managing director, A.T. Kearney Middle East.

“The UAE jumps significantly, from 31st to 18th place,” he added.

According to a report by Real Capital Analytics, volume on global real estate transactions plunged 67 per cent year-over-year in the second quarter of 2009.

As development projects are temporarily or permanently halted, the oversupply will begin to diminish.

For developers with some cash, the first step at this point is to reconsider whether to invest in geographic expansion or the transition towards a business of specialisation with the opportunity to improve operational excellence and develop ancillary revenue opportunities through asset management, the report added.

“Apart from looking to geographically expand to markets where there is currently undersupply, developers in emerging markets may increasingly consider asset management activities and attracting additional capital through REITs,” Dr Buchta said.

“For developers who want to emerge stronger from the current crisis it is key to take these strategic decisions early on in order to maximize revenue and increase profitability from existing assets and developments by following best practices in property and facilities management,” he concluded. – TradeArabia News Service