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Mon 5 Oct 2009 09:49 PM

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Emerging markets under threat from mature ones - Trump

Property developer says days of foreign buyers turning up with cash-filled briefcases over.

Beaten-down real estate prices in the more mature western markets are now attracting would-be investors at the expense of many emerging markets, Donald Trump Junior, Executive Vice President for the Trump Organisation, said on Monday during his keynote address at the Cityscape Dubai 2009 conference.

"It's a question of risk versus reward. The potential reward for investing in mature markets has improved significantly over the last couple of years, whereas the risk has if anything reduced.

''On the other hand, emerging markets, whilst they still represent good reward, their risk element - transparency, regulation - is still a concern. Therefore funds that would normally have been earmarked for emerging markets are now finding their way into the more mature real estate," he said.

Trump, who was due to speak in Egypt and India after the conference, said there was still clear potential for emerging markets, but the global fall in prices meant there was more opportunity to do deals in his own back-yard. "I've just bought a new apartment in New York which was twice the price two years ago," he noted.

While he stressed the values that characterised Dubai's boom - the excess, drive and momentum - were not lost in the recession, he recognised the challenges of reconciling the increased supply that's now coming onto the market.

"Its (Dubai’s) greatest asset was also its greatest liability. But in terms of opportunity, now is the time to be looking at real estate here. When things normalise, Dubai is going to be in a lot better position than a lot of other cities," he said.

The 'herd mentality' of investors and speculators 'flipping' properties before completion had created unrealistic expectations, where developers were disappointed if they didn't sell out units in one day.

"The days of relying on 100% foreign buyers turning up with briefcases of cash are over," he said.

Dubai has been unjustly criticised in the international media, he added, although he conceded that the city and other GCC states need to do more to increase transparency - not just talk about it.