GCC real estate developers need to increase corporate governance to attract investment
23.04.2012: Caption: Investors are willing to pay premium on shares of up to 40% on companies with good corporate governance, delegates hear at Middle East Real Estate Summit
Caption: Investors are willing to pay premium on shares of up to 40% on companies with good corporate governance, delegates hear at Middle East Real Estate Summit.
Real Estate companies with highly regulated and transparent corporate governance policies can take a leading edge over competitors on the capital markets, attracting a premium on shares of up to 40% from investors, an industry expert says.
Dr. Abdullah Alabdulgader, Founding Executive Director of the GCC Board Director’s Institute said that in the wake of the global financial crisis, real estate companies in the GCC looking to attract investment must increase transparency and public disclosure, as well as place more emphasis on the rights of employees, creditors, and other stakeholders.
“The financial crisis that hit the markets a few years ago has made clear the growing significance of good corporate governance in capital markets as it plays a key role in achieving strong and sustainable growth,” said Alabdulgader, a headline speaker at the Middle East Real Estate Summit, taking place from 22-23 April alongside Cityscape Abu Dhabi at Abu Dhabi National Exhibition Centre.
“Good corporate governance has to be perceived as a big opportunity for the real estate sector to improve its public image and to become better managed. It can be a source of competitive advantage, and therefore play an important role with investors, lenders, and developers.”
“Investors in the real estate sector are looking for transparency, that goes beyond financial reporting and includes executive compensation, board member’s qualification. Numbers also show that investors are willing to pay a premium on shares of up to 40 per cent for companies with highly regulated corporate governance strategies.”
According to the Dubai Land Department, GCC residents invested US$3.26 billion in the emirate’s real estate sector last year, while transactions increased by 20 per cent from 2010, to a value of US$38.9 billion. Alabdulgader said that investor confidence in the region has improved, but also highlighted the importance of the government regulatory framework.
“Increased investor confidence is not only reflective of a company’s good corporate governance practices, but also the factors of the regulations’ framework, which is a prerequisite for the development of sustainable capital markets,” added Alabdulgader.
“There has been a great improvement in corporate governance in the GCC region in the last few years. I believe that corporate governance in the region is now in its second stage of development. Following the CG codes initial adoption in 2005 we are witnessing greater acceptance of these codes even among non-regulated companies”.
A feature of Cityscape Abu Dhabi, the Middle East Real Estate Summit brings together the biggest names involved in regional real estate investment, development and financing. A panel of more than 35 industry leading speakers currently active in the Middle East will share their collective experience and tackle the major challenges facing the regional real estate sector.
Now in its sixth year, Cityscape Abu Dhabi takes place from 22-25 April, and returns with regular event features the Cityscape Awards tonight (23 April), celebrating the latest cutting-edge projects shaping modern city skylines across the Middle East and Africa; and the Investor Round Tables, taking place from 22-24 April, where C-level investors and developers discuss partnership opportunities and strategy.
Cityscape Abu Dhabi 2012 is held under the patronage of H.H General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. The Foundation Partner is the Department of Municipal Affairs, with Ubiquitous Telecom Technology supporting the event as the Silver Conference Partner.
-Lindsay Johnston, Total Communications Dubai - also photos
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