Liquidity crisis to help sift 'good' projects |
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The property industry would benefit from the current difficulty in funding in that this would force the "least feasible" and "not good" projects out of the business circle, a senior executive said.
Paul Abbosh, Atkins Development Director, Middle East & India, said the UAE market remains healthy but it is possible that some projects may not go ahead due to the current financial crisis.
"And when this happens the not-so-good projects would be cut out, then it is positive," he told Emirates Business, adding that Atkins - the largest engineering consultancy in the UK - have been "selective" in choosing projects to work on.
The firm, which is also the largest UK engineering consultancy in the Middle East and the world's eighth largest global design firm, has recorded $250m revenue from the region and has been growing by 30-50 per cent in the past six years.
Abbosh said they expect this rate to continue. "Bahrain, Oman and Qatar are good markets. They are all different in their ways. But the UAE remains the biggest market in the region, accounting for 10 per cent of the total turn over," he said.
Instead of treating the softening property as bad news, some recent reports suggest that the liquidity crisis and its consequential effect of cooling down the UAE's property market is a blessing in disguise.
According to HSBC, price softening in the real estate market is not only healthy but necessary at this point for the sustainability of the economic story.
John Lomax, the bank's strategist argues that, even if the current financial crisis is resolved, US and global growth is set to weaken. It therefore makes sense to focus on areas with a particularly good domestic demand story - and for most reasonable oil price scenarios there are few domestic demand plays that look much better than the Gulf.
At the same time the secular growth story could be enhanced by global de-bottlenecking, he said. Slower global growth and a reduction in infrastructure spending ought to help on the Gulf supply side, which could play out in lower prices and better access to input materials - like steel prices could fall significantly.
By Karen Remo-Listama
© Emirates Business 24/7 2008
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