By Tamara Walid
Idea is to create a securities marketplace for listing and trading of real estate assets.
A Canadian firm has teamed up with a Saudi Arabian company to create the first global real estate securities exchange, with the first group of exchanges slated for autumn of 2012 in Dubai, Canada and London.
Saudi's International Real Estate Exchange Group (IREX) and Canada's egX announced on Monday the establishment of IREX Group, which will create and operate a securities marketplace for listing and trading of real estate assets in the world's key financial hubs.
For its Middle East and North Africa branch, the company is looking at Dubai as a main option to set up an exchange, but is not ruling out other areas in the Gulf Arab region, Safar al-Harthi, executive chairman of the group, told reporters on the sidelines of a conference.
Qatar and Bahrain are among areas being considered, he said.
Ideally, if Dubai is picked, the exchange will be based in the Dubai International Financial Centre, the emirate's flagship financial district.
Harthi said the first three exchanges are expected to be launched in 18-24 months.
Harthi said: "It will be a network so anyone can list anywhere," adding that developers would be able to list new, developing and developed projects.
The global financial crisis, spurred by a real estate bubble and subprime mortgages in addition to runaway securitisation and exotic debt instruments, brought the financial system to its knees in 2008.
The Gulf Arab region was hit hard hard as most domestic investments had gone into equities and real estate and its fixed income markets lack depth.
IREX Group said it aimed to enhance liquidity through transparency and disclosure of securitised real estate assets via the exchange.
Investors will experience increased liquidity of investments and less volatility than in current equities markets, it said.
Speaking at the conference, Harthi said: "With the volume of securitised real estate currently in the global stock exchanges at 3 percent and the volume of unsecuritised global wealth in real estate exceeding 90 percent, not only is this market untapped, it is also unregulated."
IREX Group will be headquartered in Switzerland.
Leo Chamberland, president and chief executive, said: "You always have buyers and seller but a lot more activity if you have an investor base, and currently a lot of investors don't trade in the market."
The firm plans to list four projects in total, across the three exchanges, in its first year of operation, Harthi said.
Harthi said: "We have almost 20 LoIs (Letters of Intent) from big developers in the GCC (Gulf Co-Operation Council) willing to list." (Reuters)