A lack of supply in the local Syrian real estate market and decreasing returns in the Gulf is seeing more Middle East property companies flocking to Syria to boost their growth plans.
Last month, Khaldoun Tabari, vice chairman and CEO of contractors Drake and Scull International PJSC, said the company is currently in the process of setting up offices in Syria and will be announcing the securing of its first contract there in the coming weeks.
The Dubai-based contractor is the latest in a series of Gulf construction companies that are seeking to take advantage of the fledgling Syrian real estate market.
“UAE developers are rushing into developing in Syria as Syria is booming at the moment - the rich are getting wealthier, the economy has opened up and where else in the region is the birthrate still as high - over two percent,” said Raya Mamarbachi, director of real estate portal Simplyzigzag.com.
In the capital Damascus, Government-owned Emaar Properties is involved in completion of the $500m mixed use Eighth Gate development, which will house the Damascus Securities Exchange.
Palmyra Real Estate, a unit of UAE property developer Belhasa International, is behind Jasmine Hill, a development of 173 villas in the town of Yafour and Dubai-based investment group Emivest is building apartments nearby.
The UAE’s Majid Al Futtaim (MAF) Properties, developers of the Mirdif City Centre and the Mall of the Emirates retail developments in Dubai, is planning an $816.8m project in Syria, which will include a mall, hotels and office buildings.
It is not just the UAE which is seeking opportunities in Syria, the Saudi Bin Ladin Group is also developing the Palm Village near Yaafour, which will include 33 villas and a hotel.
“The decision of many investors, including UAE developers, to enter the Syrian market was based on a number of factors: Syria offers very lucrative return on investments, due to supply shortages and solid demand fundamentals," said Saadallah Al Abed, a senior consultant in research and advisory at real estate consultants Colliers International.
"The Syrian real estate market has, for many decades, suffered from the lack of investments and inefficient planning faced with high levels of growth in population, creating an extensive shortage in supply."
Syria’s GDP is expected to grow 3.9 percent in 2010 and by 4.2 percent next year and the Syrian government has pledged to allocate billions of dollars for the development of infrastructure and tourism and has plans to develop twenty new industrial cities in order to attract more direct foreign investment.
“Syria avoided the disasters that plagued Dubai by not investing in the stock market and limiting borrowing. With its growing populate and newly found opening up of its economy, it is becoming the place to invest in.....developers are always looking at their next opportunity,” said Mamarbachi.
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