UK investment targets distressed UAE property owners

Struggling property owners in the UAE are the target of a UK investment firm that will soon be bargain-hunting.

Abu Dhabi // The advisers of a new US$100 million (Dh367m) property fund say they will seek to take advantage of the rash of buyers and investors having trouble with their payments. "Although it is unfortunate for some of these individuals, the next six months or so is actually a fantastic time to seek out these opportunities," said Anthony Hackney, an investment adviser working on the fund. As banks tightened their lending standards and sales have slowed in recent weeks, a number of buyers have been trying to get rid of their units on the resale market. Many have dropped their prices as much as 25 per cent, according to brokers. The fund will be the third set up by Lewis Charles Securities in emerging markets in recent years. The firm also established a property fund for Bulgaria in 2005 and one for Romania last year. Other companies have been launching funds recently to invest in property, including an investment arm of the Dubai International Financial Centre (DIFC), DIFC Investments, which created a fund of about Dh10 billion (US$2.72bn) last month. That fund has already invested Dh3bn into Dubai Pearl, a massive project being developed by the Al Fahim Group. "We have been investigating the market over the last 18 months," said Stavros Loizou, chief executive of Lewis Charles in London. "The UAE shows great growth potential and GDP... We want to get in a position to be an early mover." The fund would be launched in the next two weeks, Mr Loizou said. The advisers were expecting to raise most of the money from European and UAE investors, he said. It will be based offshore, in the Cayman Islands. The UAE, and especially Abu Dhabi, seemed "well shielded" from the turmoil in the international markets, Mr Loizou said. Even so, the fund would focus on the big players in the market because there was an increased risk to smaller developers because of a lack of financing and a slowdown in sales across the country. The fund's strategy will be to buy entire developments from companies like Aldar Properties and Sorouh Real Estate. Because of the volume of the purchase, they hope to be able to negotiate "deep discounts" that will let them sell at a premium over time. Mr Loizou said the fund would also focus on stock in the market for a discounted rate from buyers trying to get rid of their purchases because they cannot afford the payment plan or are spooked by the market. [e-mail]