By Jason Benham
Company is looking to take advantage of falling construction costs in the Gulf region
UAE conglomerate Al Futtaim Group, which last month signed a 6 billion dirham ($1.63 billion) retail and leisure contract in Qatar, hopes to strike at least one more retail deal in the next two years, an executive said.
The company is looking to take advantage of falling construction costs and "more reasonable" salaries and is eyeing opportunities in another Gulf Arab state, the Levant and North Africa, Marwan Shehadeh, group director of corporate development, told Reuters in an interview on Sunday.
He said: "On the real estate side we are focusing on retail."
He added: "If its a similar size deal we will probably do one more over the next two years, if its a smaller size we will do more than one."
Al Futtaim signed the deal to develop the project in Doha in September with Qatar Islamic Bank and Qatar's Aqar Real Estate Investment.
"There is a gap and a need in Qatar to build a super regional shopping and entertainment destination, which we are keen and confident we will be in a position to fill. We are also confident that the banks will be there to fund us," Shehadeh said.
"We are looking at ways to mitigate the relatively high interest rates in Qatar," he said, adding he hoped funding for the project would be through a club loan deal from banks by the end of the year for as much as 4 billion riyals ($1.10 billion).
Shehadeh said financing for real estate projects remained easier to obtain in Saudi Arabia and Qatar, while financing for any asset class in Dubai was still difficult.
A recovery in Dubai's battered property market is still some three to five years away despite the confidence boost from the restructuring of conglomerate Dubai World and Dubai's recent return to international debt markets, Shehadeh said.
He said: "There is still a lot of supply. A supply demand equilibrium will take time unless major initiatives creating confidence and boosting demand can be created."
Dubai's government needs to do more in dealing with visa issues and transparency, he added.
Shehadeh said Al Futtaim would focus on its existing $385 million fund, a third of which is invested in its Cairo Festival City project, a third on its Doha project and the remainder for new projects, before setting up new funds.
He said: "Funds are currently not the flavour of the day, but hopefully in the long run we will be able to open up and do more."
Shehadeh added he thought it unlikely more property funds would be closed this year or early next in the Gulf Arab region as investors are more interested in direct deals.
He said: "For direct deals there is appetite. Eventually we will be seeking investors to coinvest in our Qatar deal." (Reuters)