|Arab real-estate markets approach saturation point|
|Arab markets may not be able to sustain the current real estate boom due to over-saturation, the CEO of the National Bank of Kuwait told The Daily Star in an interview.
"The big concern is whether the market is able to find the saturation point and avoid over-investment, which would result in a damaging glut in the property market," Ibrahim S. Dabdoub said.
The U.A.E has been leading the way in real estate, with multi-billion dollar projects like the Palm man-made islands and 100 hotels expected within the next five years. Seven thousand villas at the luxury Jumeirah Village in Dubai were said to have sold in 24 hours last September.
"There are many projects that are currently planned," Dabdoub said. "Will there be sufficient demand to fill all this new space? Unfortunately, real estate markets have a history of booms followed by busts."
Dabdoub also said the Arab regional economy is beset by a lack of democracy, oppressive bureaucracy, clunky state-owned enterprises, and piddling levels of investment.
"In most Arab countries, dramatic change is required to shift from societies where a few people control the most important decisions to ones where the general population participates in governing the affairs of the nation," Dabdoub said.
Lack of privatization in the Arab world has been a major deterrent to foreign investment.
"Why are governments providing telephone services, for example? Or selling petrol or food? Even electricity and water services should be privatized," Dabdoub said.
He also warned that regional economic integration "will be far below expectations," although the GCC should lead the way because of the Gulf countries' similar economic and social structures. The future, however, could be hopeful if reform is on the horizon.
"Great opportunities await banks in the Arab world if governments are serious about reform," Dabdoub said. "The potential for growth in a liberalized economic environment translates into opportunities for banks to finance new ventures and projects."
Amman,06 06 2005
The Daily Star