Cityscape USA Bridges U.S. And Emerging Global Markets

Cityscape USA Bridges U.S. And Emerging Global Markets

Residential News » Residential Real Estate Edition | By Scott Kauffman | October 2, 2008 8:52 PM ET

(NEW YORK, NY) - With the subprime mortgage mess still lingering in the U.S., and liquidity and credit concerns starting to create crisis-like ripples throughout the globe, real estate investors and developers are seeking that next safe and sound investment haven.  If the recent Cityscape USA Conference and Exhibition is any indication, one market still thriving with open arms is the Middle East--principally the United Arab Emirates.

At least, that was the overwhelming focal point of the real estate conference that attracted several hundred leading institutional investors, real estate developers, governmental and developmental authorities, leading architects and marketing agents, and other senior professionals for a three-day show at the Jacob Javits Center on Sept. 9-12.

While the conference theme was, "Bridging the U.S. and Emerging Markets," the majority of the attendees seemed to hail from the Middle East, or at least had the Middle East on their minds. To be sure, the show also focused a lot of attention on other strong emerging markets such as China and India.

Meanwhile, the heavy international-influenced audience was given timely viewpoints on the state of the U.S. commercial and residential markets with the most lively panel headlined by Fannie Mae executive vice president Kenneth Bacon on Sept. 11, three days after the government announced it was taking over his quasi-government institution, as well as Freddie Mac.

While that panel, titled, "Current and Long-term Views for the Multi-family and Single-Family Sectors in the U.S." was certainly a headliner, the buzz at this inaugural Cityscape USA conference was definitely Dubai and the rest of its UAE neighbors. Among the UAE real estate juggernauts exhibiting at the show were Nakheel, which is developing $80 billion worth of iconic projects such as the Palm Jumeirah, The World and Waterfront, and Abu Dhabi's Tourism & Development Council, which is now positioning itself to surpass Dubai in size and scope with massive  projects such as Saadiyat Island that will house the Guggenheim Abu Dhabi Museum, the Louvre Abu Dhabi Museum, the first Ferrari theme park and much more.

"We currently have strong investor response from the local market in Abu Dhabi and believe the time is now right to take our compelling propositions onto the world stage," said TDIC chief executive officer Lee Tabler, whose Saadiyat Island project is positioned to be the Arabian Gulf's largest single mixed use project at 27 square kilometers. "We are looking to open up an intercontinental dialogue which will put our expanding portfolio of tourism and urban renewal projects at the forefront of institutional investor planning.

"Abu Dhabi can make a convincing case for institutional investors because it has long-term economic sustainability, is pursuing well-thought-out infrastructure investment and has clear government direction and strong governance. We believe we will leave New York having piqued considerable interest among our target audience and with the foundations of ongoing dialogue that we will actively pursue moving forward."

With some of the aforementioned projects and others, such as Burj Al Arab, the world's tallest hotel now under construction in Dubai, this region has already piqued much of the world's attention. Yet, many at this year's conference seemed to agree this market is still somewhat misunderstood by many Americans.

One of the more interesting panels was titled, "U.S. Investors Abroad: Emerging Markets - Friend or Foe." Among the key panelists were Donald Trump Jr. of the Trump Organization, Blackstone Real Estate Advisors managing director David Roth and Charles Andrews, founder of Florida-based Blue Coast Real Estate & Development now doing business in Dubai.

When asked by the moderator of the panel, managing director Dennis Yeskey of Deloitte's Real Estate Capital Markets, whether the U.S. really "gets" the Dubai story, Andrews replied, "Dubai is one of the wonders of the world right now. ... [but] I really feel like America has really missed the boat on Dubai."

"There's just not a heavy presence," Andrews added. "Every time I'm there and I see someone who looks like me they're either Australian or British. Very rarely do I find an American there.

"What's interesting about Dubai is variables don't affect us like they do here in the West. As a development company you think about return on investment; you think about what we can build it for and sell it for; those factors in Dubai, sometimes don't apply. The government there--Sheik Mohammed (bin Rashid al-Maktoum)--has had incredible foresight and vision. They're dedicating revenues to building a massive infrastructure and if you're interested in doing business in Dubai it's a very transparent community. So I think they make it quite easy."

When asked by someone in the audience why Dubai appears to still be left alone largely by Americans, Andrews said it comes down to "a little ignorance and fear."

"It's as basic as that," he added. "Once people have traveled to Dubai I think they're pleasantly surprised that they like the Western influence. TGIFridays is there. It's a very kind of cool place to do business. I think once you get there a few times (fear and ignorance) dissipates and people want to quickly do business there."

Trump Jr., who helps oversee a lot of the Trump Organization's overseas projects, is one person extremely positive on the Dubai experience.  And why not, considering his company's joint-venture with Nakheel, Trump International Hotel & Tower on Palm Jumeirah, is selling units at an average price of $2,450 per square foot.

"We've had incredible success in the Middle East launching in Dubai," Trump said. "Dubai has done very well with (their vision) and really created a New York/Miami/Las Vegas kind of arena all in one. It's not just all about real estate. It's not just the financial epicenter of the Middle East where all that money is parking itself, but it's also a tourist destination.
"I know I brought my wife there on one of the trips I was on when we were going to look at our building and taking care of business and she actually had an amazing time. She went waterskiing; she went shopping. Doing these kind of things--I was actually kind of surprised because I always looked at it from a business standpoint. But they've done a very good job rounding out all the things."

Still, big-time private equity groups such as Roth's Blackstone group aren't convinced yet that places like Dubai are the wisest place to be investing right now, referring to Andrews statement that things like ROI, or return on investment, don't always apply in Dubai.

"That kind of scares us as investors," Roth said. "I mean that's what we look at. We look at supply and demand and what makes sense. And part of it is what's gone on over there hasn't always made sense from a straight traditional investment."

After last month's Cityscape USA conference and show, where the U.S. and mostly Arab World had a great opportunity to network and learn more about each other, perhaps that "ignorance or fear" about some of the emerging markets might very well start to change.

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