UAE changes could lead to growth, rising property values

The UAE made changes to how it buys and sells government real estate, responding to reports that Dubai real estate values are expected to drop between 10 and 20 percent.

The gulf nation continues to reel from the global financial fallout as it canceled 217 real estate development projects during the past two years — about half of the nation’s proposed projects.

But Sunday’s changes in how the state deals with real estate should give the nation more financial stability and could lead to growth.

From ArabianBusiness.com:

Legal amendments, announced Sunday, will allow DREC to sell off state-owned real estate and allow the agency to sue and be sued in dealings with third-party players.

By consolidating government real estate and planning into a large commercial body, Dubai will be able to build more for less money due to economies of scale. Additionally, bringing asset management out of government hands and into private control will enable greater borrowing and investment because corporations have more fiscal flexibility than governments. Corporations are more adept at handling debt, and the UAE has a bit too much of that right now to take on any more. The unwillingness to take on more debt will stall growth, so transferring some of the state real estate market to a private corporation makes some sense.

Property transactions fell to $32.5 billion at the end of last year from $41.6 billion the previous year — a 21.9 percent drop.

Of course, the  Hesham Abdullah Al Qasim, vice president and chief executive officer of DREC, already has said it will not sell government properties.

“While DREC is completely into the leasing market, and the amendments to the law now allow selling government properties, there is, however, no intention to sell any of these assets or even to go to the stock market,” he said.

I would hope this is just political posturing by the DREC so as not to alienate its new government partners. Analysts said the changes will help stimulate “sound urban planning, financially viable development and generally better economies of scale,” and will give government “an opportunity to strip off excess fat and create individually-focused business lines that are more commercial in their approach.” But that’s only if DREC takes full advantage of the changes.

The hope here is that better urban planning can elevate property values. In general, property values in poorly planned areas — such as rural communities or in an aging, blighted city center — are lower.

The UAE real estate market is in shambles. Office rents in Dubai and Abu Dhabi have dropped 69 percent and 45 percent, respectively. Residential prices in Dubai fell 56 percent from the fourth quarter of 2008. Abu Dhabi residential prices have declined 45 percent since then.

Getting more economic development through state-led urban growth could restore property values. That’s the goal here.

UAE opens more housing for women

The United Arab Emirates will expand housing opportunities for women under an amendment to the gulf nation’s housing code, bringing the nation more in line with textual rather than customary interpretation of the Qur’an.

Several groups of women who previously could not own a home in the UAE will now have the chance. Those groups include Emirati widows with children, divorced wives with children, single women without parents, unmarried women 30 years or older with deceased parents and Emirati women married to non-Emiratis.

Many people may (incorrectly) think that Islam does not allow women to own property. That is not the case, as the Qur’an states: women “shall be legally entitled to their share” (Qur’an 4:7) and that “to men is allotted what they earn, and to women what they earn.” Take it for what you will, but to me that seems like the right to property.

What has happened in many Arab nations with strong Islamic faith an emphasis of Islam based on custom rather than religious text. Those interpretations call for a more patriarchal society. To that point, if Christian nations were to abide by the customs that existed during Biblical times, those standards on women’s rights would not be much different.

The United Nations Human Development Index ranks the UAE 32nd in the world, making it the second best Middle East nation behind Israel. But the UAE’s gender inequality ranking is 47th, meaning there is certainly room for improvement.

Housing is one of the easiest ways to bridge the UAE’s gender inequality gap. After all, UAE women are clearly going to school, as a 2005 report showed 65 percent of the university students in that country were female. But just 15 percent of the workforce was female, which I suppose is not all that surprising in the Middle East but still shows some inherent discrimination against women in the workforce.

The UAE is not at risk for the types of revolution that has spread throughout the Arab world. But the government’s decision to open up housing to what are considered a taboo class in customary Islam — single women and single mothers — shows the UAE’s relative progressivism in that region.

Shaikh Zayed Grand Mosque (photos)

Came across this photo gallery of the Shaikh Zayed Grand Mosque in the United Arab Emirates. It’s a beautiful building, and I would hope that any urban planners in Arab nations can stick to some sort of Islamic architecture. Skyscrapers aren’t meant for everywhere.