Transparency and a clear business infrastructure are the most important foundations for doing business in the UAE, according to W. Jonathan Wride, managing director of Capital Partners FZ LLC, a real estate private equity fund.
Wride, who pointed to continuing free trade agreement (FTA) talks between the US and UAE as a sign that international best practice could be agreed between the two countries, called for a continued drive towards transparency in the Emirates.
He said: “In the sectors of investment and real estate, the key factor is trust, whether speaking to investors or the end consumer. In emerging financial markets such as Dubai, the phrase caveat emptor (buyer beware) must never apply.
“Those involved in a deal, whether selling land, developing projects or selling single units, must be responsible for earning the customer’s good faith – and following all due diligence in transactions. Without total disclosure at every point of the deal chain, a sustainable investment future is unrealistic.”
According to Wride, developers need to put fail-safe guarantees in place. “In the West, there is still a degree of skepticism among real estate firms as to the security of investing in projects in the UAE – though this is starting to ease after the new property laws were passed, allowing selected freehold ownership.
“As a result, UAE companies have to be extra vigilant on ensuring that their operations and transactions are solid, safe and secure.”
Capital Partners has introduced a number of recognised international safety measures, including escrow accounts on real estate transactions, and watertight construction contracts to ensure they deliver on time – and to specification.
Wride said: “While Dubai is booming, most noticeably in the real estate sector, we must ensure that we meet and exceed the customers’ expectations to build a sustainable platform for the future.
“Joint-venture partnerships, particularly with Western developers, will fast-track best practice implementation and internationally recognised standards which will, in turn, encourage more investors from outside the region.”
The new UAE property law provides a framework for foreign ownership in government-approved locations. Wride said: “This is a starting point, but further legislation is required for the market.”
Capital Partners is responsible for the single largest foreign direct investment (FDI) to Dubai, through the $1 billion iconic Riverwalk real estate development in Dubai Internet City. Riverwalk was the first freehold residential development to have been announced in the city, and the first by a Western company.
Wride said: “The implementation of a transparent operating structure is essential to reassure foreign investors and help attract more international capital. A free trade agreement (FTA) with the US, which should be signed within months, will be another step closer to this.”
The Middle East currently attracts less than 1 per cent of the estimated world pool of FDI funds. The GCC attracted $1.81 billion of FDI in 2003, compared with $7 billion in the wider Arab region. According to the United Nations Conference on Trade and Development, $480 million of those figures flowed into the UAE, primarily into its capital city Abu Dhabi.
About Capital Partners
Capital Partners FZ LLC is a privately held company specialising in the acquisition and development of innovative real estate assets. The firm is headquartered in Dubai and has operations in the Middle East and the United States. The company has been present in Dubai since 2002.
The firm looks to create iconic, industry-leading developments that add significant consumer value and improve quality of life.
Capital Partners’ expertise is in equity investment, market research and real estate development, which enables the company to pursue the role of principal and attain the critical first-mover advantage in the regions where it operates.
