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ECONOMY-UAE: Indians, Pakistanis Fuel Fresh Real Estate Boom

Peyman Pejman

DUBAI, Apr 2 2007 (IPS) - Indians and Pakistanis are leading several other Asian nationalities in spending millions of dollars gobbling up real estate investment opportunities in the northern emirates of this tiny Gulf state, industry sources here say.

Iranians and Russians are also heavy real estate investors, the sources say. Demand from foreign investors has been so high that almost all real estate agencies have hired multi-lingual sales agents to cater to non-English speaking customers. Languages offered include Hindi, Farsi (Dari), Russian and even Afrikaans.

While some of the investors are expatriates currently living in the United Arab Emirates (UAE), others are individuals taking advantage of higher salaries and the booming economies of Asia, Iran, the former Soviet republics and Europe, industry insiders say.

Already the UAE has one of the most diverse populations in the Middle East but South Asians predominate. In 2006, there were approximately 1.2 million Indian nationals and 700,000 Pakistani nationals in the UAE, making South Asians the largest expatriate community in the oil-rich nation, forming close to 60 percent of the population.

“The biggest buyers are Indians and Pakistanis. Many of them are working in places where they are making good money and are looking for a place between where they are now and their home countries,” says Omar Ayesh, president of Tameer real estate development and investment company.

The UAE government does not keep a centralised database of investors, so there is no accurate demographic data on the buyers. Spokesmen for Indian and Pakistani embassies in the UAE said they are unaware of the number of investors from their countries because their compatriots would normally not contact the embassy for such purchases.

Ayesh and others say most of the recent investments have been in the two northern emirates of Ras Al Khaima and Umm Al-Quwain. Both emirates have announced plans to spend billion of dollars to build a series of middle-to-high end residential apartments, villas, schools, shopping malls, and entertainment centres. They also have revised their real estate laws to allow foreigners – whether residents or visitors – to buy and sell property.

“Some are buying it as short time investment to sell later and make a profit and some are buying for long-term,” says Amit Vaid, a real state agent with RAK Properties that develops real estate in Ras Al Khaima.

While the emirate of Ajman, tucked in between Dubai and the two northern emirates, has also announced development plans, it has generally attracted fewer investors because, as one real estate insider put it, “they are really poor in public relations and have no idea what they are doing or how to get their message across.”

The latest property development rush outside of Dubai is the subject of controversy and much speculation. The UAE is a federation of seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm Al-Quwain.

Why are the other emirates doing what Dubai did a few years ago? What is the perceived market? Would this take the spotlight away from Dubai or create a countrywide balance?

“There is a real demand in the region for investment opportunities, in great part because of high oil prices. There are a lot of people, Arabs and Muslims and others who are looking for places to invest their money,” says Ayesh. An anti-American fever in the region is making investors shy away from the United States markets, according to several financial analysts in Dubai.

In attracting petrodollars of high rollers or the expanding saving accounts of ordinary workers, the northern emirates seem mindful of the pitfalls Dubai went through, while trying to mark their own footprints.

Sharjah, the conservative emirate next to Dubai, for example, is concentrating more on attracting business investors rather than Westerners who may demand items forbidden in Islam, such as alcohol and bikinis, in return for spending hundreds of thousands of dollars on high-end vacation apartments.

“I know that Sharjah is very conservative compared to Dubai, but generally our leaders are very concerned about providing people with an easy life, but keeping to the (religious and moral) standards without ignoring luxury,” says Sheikha Shamsi at Sharjah ‘s economic development department.

Sharjah is, however, spending five billion US dollars to develop the Nujoom Islands to build residential units, gardens, parks and beaches that may attract Western investors.

Real estate insiders say the recent property development rush would not detract from Dubai’s glitter; it might make the ‘liberal star’ of the Middle East an even more attractive place.

“Dubai will always be the heart (of development projects). Dubai is not just an investment opportunity. Dubai is a lifestyle,” says Mohamed Sharif, chief executive officer of Property and Finance Real Estate in Dubai. “Each emirate might be offering its own advantages, but they won’t necessarily take the pressure off Dubai,” he adds.

Residential sale prices have already dropped in Dubai in the past year, although experts says that is more because of over-development in Dubai and not a result of development by the northern emirates.

Umm Al-Quwain is planning to develop industrial and business areas to complement its residential development in the hope that the tiny emirate would attract actual residents and not just speculators.

Several sources interviewed said a number of large businesses in Dubai are already considering moving some of their operations to the northern emirates, where both operating and housing costs are lower.