At the turn of the millennium, real estate markets and all associated sectors emerged as a key and vital factor of boosting economic development in Arab countries. This was especially because these markets have contributed greatly to the creation of new jobs, and the emergence of a number of other industries, such as contracting and marketing, which led to an increase in the gross domestic product (GPD). In addition, the real estate market is considered a safe haven for individuals and investors seeking rewarding investment.

The demand for real estate has witnessed a surge due to the receding Arab financial markets and the increasing oil prices. The construction sector has witnessed a remarkable activity as many companies entered the market seeking capital investment opportunities and profit.

It is noteworthy here that the housing sector has eyed an unmistakable demand to satisfy an essential life requirement for citizens and families, that is, to buy residential units on which demand remains stable.

But, despite the increasing number of real estate projects and a surge of investors’ interest, the housing sector still lacks the foundations and the necessary data to support its growth.

There are other overlapping factors affecting this sector. Most of the Arab states still do not have giant housing companies that work on meeting the increasing demands of the constantly growing population. This sector remains dominated by practices of monopoly with no consideration to the quality of these projects.

Certainly, a large part of the problem stems from a lack of regulations and the volatility of the real estate market prices. This could be clearly seen in the disparity between supply and demand, not to mention the difficulty of obtaining real estate loans, the high interest rates, and the scarce adequate financing to invest in the real estate sector.

Moreover, the weakness of the current legislative structures in some Arab States and the lack of coordination between government bodies responsible for providing solutions have led to sharp fluctuations in property prices from one year to another and greatly reduced the interest in investing money in the real estate sector.

It is also noteworthy that the fundamental problems stemming from the turbulent housing sector remain unresolved so far. Therefore, there is a strong need to study the housing finance system, and to commission official real estate finance agents to select the property and determine the suitable property in the light of the financial capabilities of the loan seeker, calculate the installments and duration of the payment plans, and determine the suitable funding party. All this should alleviate the financial problems individuals face while trying to buy a property.

We should also take into consideration the lessons learned from finance practices implemented in pioneering nations like the US and Europe. Among such lessons is the setting up of a ministerial committee that includes representatives from all concerned government bodies to come up with a law for real estate financing and appoint a real estate appraiser, who will determine the actual price for housing units being sold or purchased.

Such committee would also be responsible for evaluating any measures that could benefit the local market and the small investors and identifying the opportunities that satisfy the people’s needs while at the same time achieve profits. It is also necessary to look for other primary and secondary markets for real estate financial tools.

To find a way out of this problem, traditional process of real estate financing should be revamped, and the area of real estate financing should be freed from the constraints posed by the investor’s annual returns or his credit record.

There is also a need to promulgate laws that regulate the transfer of ownership of properties to help stabilizing prices. In addition, direct government subsidy is necessary to meet the demand on properties. Such measures will contribute positively to deal with problems facing the Middle Class like recession, and housing. They will also help develop a large number of integrated residential neighborhoods and market these neighborhoods in a short span of time to meet the demands of population growth.

In conclusion, real estate funding is considered one of the most important elements influencing the activity of the market. Thus, it is wroth stressing that developing and introducing financial channels by companies and banks specialized in the field of real estates will lead to projects contributing to the GDP of the national economy and promote the development of the real estate sector.

Source: english.daralhayat.com

This entry was posted on Tuesday, February 20th, 2007 at 6:55 pm and is filed under Real Estate. Tags: bank development Emma Europe finance gross domestic product oil prices Projects Property Real Estate real estate appraiser real estate boom real estate finance real estate fund real estate market real estate markets real estate project real estate projects real estate sector . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.