Further FDI predicted after US$1Bn Landmark Real Estate Deal between US Private Equity Firm and Dubai Government

The UAE – which currently attracts just over 25% of the GCC’s foreign direct investment (FDI) – can capitalise on recent real estate deals with Western companies to ramp up inbound funds, according to one of the principal market players.

W. Jonathan Wride, managing director of Capital Partners FZ LLC, which is currently responsible for one of the largest Western investments in Dubai through its $1billion RiverWalk real-estate development, identified successful case studies and the removal of trade barriers as key to future success.

Wride said, “The launch of RiverWalk demonstrates how a privately held American company can successfully negotiate groundbreaking land development terms with Gulf state officials.

“The Dubai government has been very supportive of our efforts and has been vocal in encouraging mutually beneficial agreements that serve to attract foreign direct investment.

“At present, there is very little international capital flowing into the region – and the funds will start to come with the relaxation of trade barriers and the higher levels of governance implemented by Dubai International Financial Centre (DIFC) and the newly-formed international stock exchange, the Dubai International Financial Exchange (DIFX).”

The Middle East currently attracts less than 1% of the estimated world pool of FDI funds, according to Dr Omar bin Sulaiman, the director-general of DIFC, who recently told the World Economic Forum that the GCC countries “are investing significantly more in other countries outside the region than they are receiving”.

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.

Wride explained, “Dubai’s real-estate boom will continue to be instrumental in securing regional investment into the city, but we believe the RiverWalk case study will encourage other investors outside the Middle East – including in North America – to use Dubai as a channel for their investment portfolios.”

In July, Capital Partners signed an agreement with Dubai Technology and Media Free Zone (TECOM) - part of the government body Dubai Holding - to develop RiverWalk, a signature $1 billion project to be built in Dubai Internet City. The 38-acre, mixed-use development has been planned in agreement with the government of Dubai.

Capital Partners is the first non-UAE or GCC national private group that has been given the privilege by a government institution to develop a master development in the Emirate of Dubai and will be the first group to sell freehold residential and commercial property in the free zone.

“As Master Developer, we have the ability to enter into joint ventures with reputable partners on the development of the project, which is a tremendous advantage,” Wride added.

RiverWalk is a mixed use development in the heart of “new” Dubai. The project will be a car-free environment and will include more than 5 million square feet of residential apartments, offices, boutique shops, galleries, cafes, a 300-room Courtyard by Marriott hotel and 120 Marriott serviced apartments.

Phase One of the total development is currently underway and consists of 1.5 million square feet of residential and commercial space with freehold sales activity commencing before the end of the year.

Todd C Thiel, managing director, said, “Based on the wide amount of interest we are receiving and the speed of the local market, we are expecting very strong sales, both to investors and direct to the consumer.

“We anticipate that the potential to actually own property – whether apartments, or office space – in one of the region’s fastest-growing free zones will add a new dimension to Dubai’s flourishing real estate sector.

"The terms of our agreement with the government of Dubai provide advantages that will offer additional safety mechanisms to owners. When details of these are revealed, we believe this will create an additional catalyst to the already brisk response in the marketplace."

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