Performance of the Middle East Emerging Property Markets
The previous chapters have constituted the preamble to the analysis to be conducted at this stage. Specifically, this chapter reveals the distribution of the survey, the collection of answers and the processing of the findings in order to generate conclusions. The fact that the survey is used generates a wide array of benefits at this stage. For instance, the issuance of the survey and its completion was an efficient process as all respondents were familiar with the research method. Additionally, the questionnaire creates opportunities to collect vast amounts of information. Finally, the use of the survey allows the efficient processing of the data and their integration in easy to understand results.
Before however accessing the information collected through the survey and processing it, it is necessary to present the sample onto which the study was conducted. The sample is formed from 70 property companies in the Middle East, from three different countries, namely Jordan, Egypt and Syria.
After the sample is described, the chapter moves on to the presentation of the results and their analysis, structured onto three specific sections, namely:
Results and analysis of the Jordanian property companies
Results and analysis of the Egyptian property companies
Results and analysis of the Syrian property companies
As the results of the survey are presented and analyzed, a discussion section is introduced. The scope of this section is to integrate all information collected and to correlate it with the data retrieved from the secondary sources of information. The aim of this section is that of providing answers to the initially posed research questions, and ensuring as such that the objective of assessing the importance of the Middle East property market is achieved. Ultimately, the chapter comes to an end with a section which summarizes the most important findings.
2. Sample
As it has been previously mentioned, the sample is composed from 70 property companies in three different countries of the Middle East, as follows:
30 property companies from Jordan
30 property companies from Egypt, and 10 property companies from Syrian.
In a percentage format:
43 per cent property companies from Jordan
43 per cent property companies from Egypt and 14 per cent companies from Syria.
The composition of the sample by the criterion of origin country is presented in the chart below:
Where 1 is Jordan, 2 is Egypt and 3 is Syria.
The name of property company is relatively generic in the meaning that various organizations in the field of real estate have been contacted. They were presented with the survey and they provided their answers. The respondents register increased variety, some of them being simple property companies, others being real estate investment trusts, or other being specialized banks and property investors. From this angle, the composition of the respondents is revealed below:
30 per cent of the respondents were property companies
30 per cent of the respondents were real estate investment trusts
20 per cent of the respondents were real estate transaction specialized banks, and 20 per cent of the sample members were property investors.
This structure is revealed in the chart below, in which
1 stands for property companies
2 stands for real estate investment trusts
3 stands for specialized banks and
4 stands for property investors.
The diversity of the members in the research sample was especially created in order to ensure high levels of objectivity. This purpose was also followed in the choice of the three countries to be integrated in the sample. Unlike the initial selection of ten countries to represent the Middle East and the assessment of its property market, the endeavor would have implied tedious work. The selection of Jordan, Egypt and Syria is nevertheless useful as the three states are utmost representative of the property market in the Middle East. Additionally, the selection of the diverse sample ensures higher levels of objectivity and reduces the chance of bias as it collects and integrates the beliefs and attitudes of numerous individuals.
The respondents, similar to the companies, were of various positions and this decision was also made with the intent of creating objectivity and integrating the standpoints and opinions of as many real estate related personnel as possible. In order to convince the individuals to complete the survey, anonymity was ensured. Additionally, in order to convince the economic agents to participate in the study, they were promised copies of the findings. In such a manner, the study supports both the theoretical as well as practical development of the real estate field.
At the level of the actual occupation of the respondents, these include a wide array of positions in the financial department, such as bank managers, bank employees, central bank employees, insurance employees and brokers. According to this criterion, the sample is structured as follows:
10 per cent of the respondents are employees in central banks
30 per cent of the respondents are employees in commercial banks
10 per cent of the respondents are managers of banks
25 per cent of the respondents are brokers, and 25 per cent of the respondents are insurance agents.
The chart below reveals this composition and the numbers from 1 to 5 represent the categories of respondent positions, as they have been introduced above, namely:
1 stands for the employees in central banks
2 stands for the employees in commercial banks
3 stands for the managers of banks
4 stands for the brokers, and 5 stands for the insurance agents
Two final criteria which were used in the selection of the sample were represented by the size of the company and by its experience within the real estate industry. In this order of ideas, the size was measured in the number of the individuals employed and it was required that the economic agent employed at least ten staff members. Companies which hired less than ten staff members were excluded from the sample construction process.
At the level of the experience of the company within the real estate sector, a condition was imposed that the organization had to have been operating within the industry for at least two years. A higher threshold of five years was initially imposed, but it was eventually eliminated as the real estate market in all Jordan, Egypt and Syria are emergent and new, and developing firms are an integrant component of this type of market. The two years experience within the industry is as such considered as sufficient time in which the organization has become familiar with the industry features and is as such able to provide the researcher with valid input.
In terms of the firm size, the companies were divided into three categories, each represented below:
50 per cent of the firms employed up to 40 staff members
30 per cent of the firms employed between 40 and 70 staff members and 20 per cent of the firms employed over 70 staff members
The chart below reveals this composition of the research sample, with the specification that:
1 stands for the property companies which employ up to 40 staff members
2 stands for the property companies which employ between 40 and 70 staff members, and 3 stands for the property companies which employ over 70 staff members.
Finally, at the level of the organizational expertise within the real estate field, the sample was characterized by the following composition:
45 per cent of the companies had been present within the industry for up to 5 years
35 per cent of the companies had been present within the industry for a period between 5 and 10 years, and 20 per cent of the companies had been operating within the real estate industry for more than 10 years.
The chart below reveals this composition, with the following specifications:
Number 1 stands for the firms which have been operating within the industry for up to 5 years
Number 2 stands for the firms which have been operating within the real estate industry for a period between 5 and ten years and Number 3 represents the firms which have been operating within the real estate industry for more than ten years.
The above presented features of the research sample were identified before the questionnaire was distributed. Nevertheless, after the survey was completed and the data was gathered, more characteristics of the research sample were identified. Specifically, the features of the sample were collected through questions 1 and 2 and they revealed the criteria about the capital of the organizations and the value of their property portfolios.
At the level of the company capital, the sample is constructed as follows:
30 per cent of the respondents possessed capitals up to $20 million
40 per cent of the respondents possessed capitals between $20 and $50 million
20 per cent of the respondents possessed capitals between $50 and $100 million, and 10 per cent of the respondents possessed capitals over $100 million.
The chart below reveals this structure based on capital size, with the numbers 1 to 4 indicating the category values of the capitals, namely:
1 stands for a capital size up to $20 million
2 stands for a capital size between $20 and $50 million
3 stands for a capital size between $50 and $100 million and 4 stands for a capital size over $100 million
From the standpoint of the value of the organizational portfolio, the sample is composed from respondents with varying property portfolios, as follows:
30 per cent of the respondents possess property portfolios up to $10 million
40 per cent of the respondents possess property portfolios of values between $10 and $30 million
20 per cent of the respondents possess property portfolios between $30 and $50 million, and 10 per cent of the respondents possess property portfolios with values over $50 million.
Based on the assessment of the sample features in terms of capital size and value of the property portfolio, an observation is made in the fact that a proportion is kept between the two. In other words, the property companies in Jordan, Egypt and Syria seem to be prudential and correlate their capital sizes with the values of their portfolios.
3. Results and analysis of the Jordanian property companies
The results of the implemented questionnaire are revealed throughout the table below:
a (%)
b
c d e f g
Total (%)
Q3.
30
70
x x x
Q4.
40
60
x x x
Q5.
60
20
15
5
x x x
Q6.
Portfolio diversification
10
10
60
13
7
x x
Shortage of commercial properties
5
50
15
20
10
x x
Availability and choice
10
60
10
10
10
x x
Strong performance
70
20
5
3
2
x x
Greater understanding
71
9
10
6
4
x x
Q7. Lack of stocks
15
15
50
20
0
x x
Competition
20
20
40
15
5
x x
Market depth
40
30
20
10
X
x x
Transparency and data availability
85
8
7
0
0
x x
Political uncertainties
90
7
3
0
0
x x
Q8.
70
20
10
0
x x x
Q9.
30
15
15
40
x x x
Q10.
40
20
40
0
x x x
Q12.
60
10
30
x x x x
Q13.
20
30
30
20
x x x
Q15.
30
30
20
20
x x x
Q16.
65
20
10
5
x x
X
Q17.
UAE
10
Qatar
10
Egypt
60
KSA
5
Kuwait
4
Jordan
11
Other
0
Critical
Very important
Important
Less important
Unimportant
x x x
Q18.
30
60
7
3
0
x x
Q19.
55
35
10
0
0
x x
Q20.
30
70
0
0
0
x x
Q21.
65
35
0
0
0
x x
Q22.
70
20
10
0
0
x x
Q23.
73
27
0
0
0
x x
Q24.
15
68
12
5
0
x x
Q25.
22
58
10
10
0
x x
Q26.
80
20
0
0
0
x x
Q27.
13
77
10
0
0
x x
Q28.
20
80
0
0
0
x x
Q29.
77
23
0
0
0
x x
Q30.
69
15
0
16
0
x x
Q31.
27
23
50
5
0
x x
Q32.
23
67
10
0
0
x x
Q33.
80
15
5
0
0
x x
Q34.
12
24
20
44
0
x x
The lines below reveal the interpretations and analysis of the data collected in the table above:
Question 3: 30 per cent of the respondents in the Jordanian research sample argued that they invested in a single type of emerging property market and 70 per cent indicated that they invested in more types of emerging property markets. The property companies which invested in more types of emerging property markets seek stability and financial gains through diversity. Those who only invested in a single type of emerging property market bet on short-term gains, but also share higher levels of risk.
Question 4: The Jordanian property companies have invested in both regional as well as other real estate endeavors, but the adversity to the risks posed by the region seemed relatively high, and this statement is supported by the fact that only 40 per cent of the respondents in the sample indicated that they invested in regional projects.
Question 5: In terms of the actual real estate assets in which the property companies in Jordan have invested, most of them indicate residential, followed by commercial building and office buildings. A 5 per cent of the firms indicated that they have also invested in other types of properties, namely buildings to be used by the communities, such as schools or parks. In most cases, these investments were decided upon due to tax considerations as the property companies registered them as donations and deduced them from the taxes owned to the Jordanian state.
Question 6: In terms of the elements considered in the investment in the Middle East property markets, the respondents indicated the following:
Portfolio diversification is important, but not crucial. As the risk are still high for the region, investors do not tend to seek the region for diversification purposes
The shortage of quality local commercial properties is very important in the decision to invest
The greater availability is also very important
The strong performance of other property companies in the region is crucial
The greater understanding of the Middle East's emergent property market is also crucial. Investors who possess limited knowledge of the region would not invest as they would be unable to cope with the region specific risks and features.
Question 7: The access to information and the transparency of the field is crucial in decisions to investing in Jordan. The need for information is however underserved in Jordan and this raises additional barriers. At the level of an informational infrastructure, Jordan only possesses 501,200 main telephone lines, 6.014 million mobile telephones, 42,412 internet hosts and 1.642 million internet users (Central Intelligence Agency, 2011).
Aside from data transparency and availability, the other elements listed as critical in the decision to invest in the region are represented by market depth and political uncertainties. The competition and the lack of stocks are perceived as important, but not crucial.
Question 8: At the level of the risks assumed by property companies, the majority of the Jordanian investors ascertained that they accept higher levels of risk in the hope of gaining incremental gains. This feature is one which attracts more investors who seek quick earnings. The rest of the investors accept moderate levels of risk in the hope of gain or in the hope of identifying and seizing growth opportunities.
Question 9: The majority of the Jordanian property companies argued that they expected their investments to beat the stock market and that, with this objective in mind, they accepted higher levels of risk. Other investors were more prudential and expected returns equal to the stock market.
Question 10: The majority of the Jordanian investors argue that it is important to understand the possibility of loss and even to tolerate amount of loss. They do not however accept the possibility of tolerating any loss.
Question 11: Based on the responses of the Jordanian property companies, the following rank is considered most relevant in the evaluation of property investments:
1 -- Property quality
2 -- Management quality
3 -- Company focus / strategy
4 -- Capital structure / balance sheet
5 -- Price
Question 12: The property companies are more protective now and implement more prudential strategies as a result of the internationalized economic crisis. Few investors however recognize the opportunities of today and are willing to accept more risks.
Question 13: The duration of the investments in Jordan is relatively balanced, indicating as such the existence of investors who hope to register both quick gains, as well as long-term, sustainable gains from their investments.
Question 14: The majority of the respondents indicated that they use performance benchmarks, following as such the global trend of alignment and integration of quality standards within the real estate sector.
Question 15: The Jordanian property companies seem determined to increase or maintain their investments in the region. Some investors nevertheless desire to decrease them and their desire is based on previous failures within the regional market.
Question 16: The majority of the property companies in Jordan indicated that they would continue the initial trend and invest their sums in the construction of residential facilities. They would also allocate sums to investments in the commercial, office and public endeavors, but to a more limited degree.
Question 17: The answers to the seventeenth question indicate that the players in the real estate market are interested in investments in Egypt. This situation arises in spite of the deep fall in the real estate prices in Egypt which does not intimidate investors. In other words, the investors recognize the underserved need for housing in Egypt and perceive it as a source of future business operations.
Questions 18 through 35:
The reforms of the global financial system are very important in the generation of impacts on the property company's returns
The financial regulation reforms in the local and global market have a crucial impact on the PC's returns
The global interest rate risk has a very important impact on the PC's returns
The local inflation risk generates critical impacts upon the returns of the property company
The local and regional market risks are critical for the PC's returns
The local and regional macroeconomic performance is critical for the PC's returns
The local and global macroeconomic trends and expectations are very important for the PC's returns
The price of the stock is very important in the long-term returns of the property company
The liberalization of the Middle East financial system is crucial for property analysts, investors, traders and policy makers
The national and regional outputs are very important for the returns of the property company
Inflation is very important in the PC's returns
The interest rates are crucial in the PC's returns
Diversification is crucial for business success as it reduces the risks
Diversification is important in generating incomes within the Middle East emergent property markets
The opening of new stock markets in the Middle East represents a very important impact upon the strategy of the property company
The establishment of the DSE is critical for diversification in the region as it creates more sources for borrowed capitals, which in turn imply increased chances for growth and development
The simple establishment of the DSE is not that important for the PC's returns and profits. Impacts would be latent and indirect and they would be generated by the competition and the opportunities created through the Damascus Securities Exchange
Finally, the establishment of the DSE would play a critical role in the performances and returns of the emerging property market in the Middle East.
4. Results and analysis of Egyptian property companies a (%)
b
c d e f g
Total (%)
Q3.
22
78
x x x
Q4.
50
50
x x x
Q5.
70
15
13
2
x x x
Q6.
Portfolio diversification
9
11
55
18
7
x x
Shortage of commercial properties
5
50
15
20
10
x x
Availability and choice
15
55
12
8
10
x x
Strong performance
65
15
15
4
1
x x
Greater understanding
80
5
9
4
3
x x
Q7. Lack of stock
30
20
40
10
0
x x
Competition
20
30
30
15
5
x x
Market depth
50
30
20
0
0
x x
Transparency and data availability
79
11
10
0
0
x x
Political uncertainties
90
10
0
0
0
x x
Q8.
50
30
20
0
x x x
Q9.
50
0
10
40
x x x
Q10.
70
5
25
0
x x x
Q12.
80
5
15
x x x x
Q13.
30
20
20
30
x x x
Q15.
40
30
20
10
x x x
Q16.
50
20
15
15
x x x
Q17.
UAE
15
Qatar
5
Egypt
50
KSA
15
Kuwait
5
Jordan
10
Other
0
Critical
Very important
Important
Less important
Unimportant
x x x
Q18.
11
69
20
0
0
x x
Q19.
71
19
10
0
0
x x
Q20.
8
10
82
0
0
x x
Q21.
77
13
10
0
0
x x
Q22.
68
22
10
0
0
x x
Q23.
65
35
0
0
0
x x
Q24.
25
55
20
0
0
x x
Q25.
20
60
20
0
0
x x
Q26.
89
11
0
0
0
x x
Q27.
79
11
10
0
0
x x
Q28.
67
22
11
0
0
x x
Q29.
72
20
8
0
0
x x
Q30.
17
23
49
11
0
x x
Q31.
18
20
50
12
0
x x
Q32.
19
20
60
1
0
x x
Q33.
76
24
0
0
0
x x
Q34.
0
25
50
25
0
x x
Q35.
82
18
0
0
0
x x
Question 3: The large majority of the respondents indicated that they invested in more categories of emerging property markets, and by this they protect their income through stability. Those who invest in a single type of emerging property markets reveal a lower threshold for risk.
Question 4: In Egypt, the proportion of property companies which invested in the region and those which did not is in balance. This indicates that half of the investors assumed the risks of the region in hope of gains, whereas the other half focused either on national investments alone, either on the combination of national investments and investments outside the Middle East region.
Question 5: The majority of the property companies in Egypt have invested most of their funds in residential building, followed by commercial, office and other. By others, the respondents indicated community projects. The decisions to invest in community projects were divided between tax deduction incentives and desires to support the development of the communities and as such create a more positive public perception of the organization.
Question 6: Similar to the case of Jordan, the Egyptian property companies place the most emphasis in making their decision to invest in the Middle East on their knowledge of the region, as well as on the performances of other property organizations operating in the region.
Question 7: The need for efficient information is a critical aspect within the Egyptian real estate market. While the country is not among the global leaders in this sector, it does possess an adequate informational infrastructure, characterized by the following: 10.313 million main telephones lines in use, 55.352 million mobile telephones, 187,197 internet hosts and 20.136 million internet users (Central Intelligence Agency, 2011).
The uncertainty of the Middle Eastern government's policy in the field of property investments is considered crucial by the majority of respondents. The situation could become even more severe as the overall political stability of Egypt becomes a national concern in the aftermath of Mubarak's forced resignation.
Aside from political uncertainties and the need for information, another critical criterion is represented by the depth of the market. The elements of stock insufficiency and competition are considered important, but not crucial.
Question 8: Most of the Egyptian investors accept the higher levels of risk in order to register gains and accept this as a feature of the regional market. Other investors however accept moderate risks in order to register some profits or to capture growth opportunities.
Question 9: The Egyptian investors were more prudential than the Jordanian ones and expected their investments to retrieve gains equal to the stock markets. However a large percentage of them still hoped for higher gains, none of them perceived the investments made as able to offer security.
Question 10: The Egyptian property companies understand the risk of losses throughout the following three years, but argue that they would only accept a limited loss. The need for the Egyptian property companies to understand the incidence of risks is even more so increased now as a result of political instability.
Question 11:
1 -- Company focus / strategy
2 -- Management quality
3 -- Property quality
4 -- Price
5 -- Capital structure / balance sheet
Question 12: The Egyptian PCs are more prudential today as a result of the crisis; however, there are some companies which recognize the new opportunities and are willing to accept higher levels of risks in order to seize them.
Question 13: Similar to Jordan, the Egyptian property investments seem balanced in time, with the specification that the Egyptian investors seem more prone towards long terms and short-term investments, with their interest on medium term being more restricted.
Question 14: Most Egyptian property companies have declared to use performance-based benchmarks which ensure higher quality and global alignment.
Question 15: The investors desire to increase their operations in Egypt and this is explained by the fact that the recent socio-economic changes are expected to generate demands for real estate operations. The investors who wish to reduce their operations argue past failures as well uncertainties as a result of the recent political crisis.
Question 16: In terms of future investment intentions, the majority of the respondents in the research sample indicated that they would look towards the residential sector. An observable difference is revealed at the level of other projects and this is attributed to the belief that the change of power in Egypt would lead to reforms, and the subsequent reconstruction and infrastructural development in the country. In such a context, the property companies expect to invest more in the public sector.
Question 17: The majority would invest in Egypt, but other would also seek higher profits in the United Arab Emirates and in the Kingdom of Saudi Arabia. The decision to invest in other regions than Egypt would be based on the principles of portfolio diversification.
Questions 18 through 35:
The reforms of the global financial system generate an important impact on the returns of the property company
The financial regulation reforms in the local and global market are of a crucial importance for the PC's returns
The global interest rate risk plays an important part in the property company's ability to generate returns
The local inflation risk plays a critical role in the company's ability to generate returns
The local and regional market risks are critical for the PC's returns
The local and regional macroeconomic performance is critical for the property company's ability to generate returns
The local and global macroeconomic trends and expectations are very important for the PC's ability to generate returns
The price of the stock is very important for the company's ability to generate long-term returns
The liberalization of the Middle East financial system plays an essential part for property analysts, investors, traders and policy makers
The national and regional outputs are critical for the returns of the property company as only they can ensure stability and demand in this time of turmoil
Inflation is crucial in the PC's returns
The interest rates are crucial for the PC's returns
Diversification is important for business success as it reduces the risks
Diversification is important for the ability to generate incomes within the Middle East emergent property markets
The opening of new stock markets in the Middle East represents a very important impact upon the PC's strategic choices
The establishment of the DSE is critical for the regional diversification of the real estate sector
The creation of the DSE is important
The opening of the DSE would play a critical role in the performances and returns of the emerging property market in the Middle East.
Ultimately, it would appear that the current crisis facing Egypt makes the country more sensitive to national issues. Egypt remains under the influence of the macroeconomic issues, but its current issues also endanger the stability of the real estate market.
5. Results and analysis of Syrian property companies a (%)
b
c d e f g
Total (%)
Q3.
25
75
x x x
Q4.
20
80
x x x
Q5.
60
20
20
0
x x x
Q6.
Portfolio diversification
5
5
70
12
8
x x
Shortage of commercial properties
10
60
20
20
0
x x
Availability and choice
20
70
10
0
0
x x
Strong performance
80
10
5
5
0
x x
Greater understanding
70
10
10
10
0
x x
Q7. Lack of stock
30
30
20
20
0
x x
Competition
15
15
55
15
0
x x
Market depth
60
30
10
0
0
x x
Transparency and data availability
80
15
5
0
0
x x
Political uncertainties
90
10
0
0
0
x x
Q8.
70
10
20
0
x x x
Q9.
50
0
25
25
x x x
Q10.
60
0
40
0
x x x
Q12.
70
10
20
x x x x
Q13.
25
30
30
15
x x x
Q15.
50
20
10
20
x x x
Q16.
70
20
10
0
x x x
Q17.
UAE
2
Qatar
5
Egypt
30
KSA
3
Kuwait
5
Jordan
5
Other (Syria)
50
Critical
Very important
Important
Less important
Unimportant
x x x
Q18.
20
50
10
20
0
x x
Q19.
80
20
0
0
0
x x
Q20.
5
68
15
12
0
x x
Q21.
82
12
6
0
0
x x
Q22.
91
9
0
0
0
x x
Q23.
81
19
0
0
0
x x
Q24.
20
25
45
10
0
x x
Q25.
20
40
30
10
0
x x
Q26.
68
32
0
0
0
x x
Q27.
24
56
20
0
0
x x
Q28.
55
35
10
0
0
x x
Q29.
66
25
9
0
0
x x
Q30.
14
65
16
5
0
x x
Q31.
33
57
10
0
0
x x
Q32.
63
27
10
0
0
x x
Q33.
72
18
0
0
0
x x
Q34.
15
25
50
10
0
x x
Question 3: The majority of the respondents in the research sample constructed in Syria argued that they followed the principles of portfolio diversification and invested in more types of emerging property markets. The 25 per cent who invested in a single type of emerging market reveal lower levels of adversity to risk.
Question 4: The large majority of the respondents stated that they did not invest regionally, meaning as such that their investments were either focused within their own country, or they integrated investments outside the Middle East region.
Question 5: The Syrian property companies have invested the majority of their funds in residential building, followed by commercial building and offices, to an equal degree of investment.
Question 6: Similar to Jordan and Egypt, the investors' decision regarding the Middle East are primarily based on the operational outcomes of other firms operating in the business as well as on the ability to comprehend the complexities of the region.
Question 7: Just like in Jordan and Egypt, the property companies operating in Syria perceive the need for information and transparency as being critical. The country is nevertheless only limitedly available to serve this need. The Syrian informational infrastructure is characterized by the following: 3,871 million main telephones line in use, 9.697 million mobile telephones, 8,144 internet hosts and 4.469 million internet users (Central Intelligence Agency, 2011). The other crucial elements are represented by the political uncertainty and by the depth of the market. This specifically implies that the investors are aware of the political risks in the region, as well as of the lack of development and maturity in the market.
Question 8: Similar to the Jordanian and the Egyptian investors, the majority of the Syrian investors accept high levels of risk in return for profits. Other investors however limit the risk to a moderate level and expect some gain or the ability to seize growth opportunities.
Question 9: The Syrian investors revealed a lower threshold for risk and ascertained that their investments retrieve gains comparative to those in the stock market. No investor perceived their investments in the region as safe, indicating as such the overall perception that the region is a risky bet for investors.
Question 10: The Syrian property companies understand the need to comprehend the risks associated within the following three years and they argue a tolerance to a low loss. Their tolerance for higher losses is restricted, meaning as such that it is expected for the companies to be developing and implementing protectionist and prudential strategies.
Question 11:
1 -- Company focus / strategy
2 -- Management quality
3 -- Property quality
4 -- Capital structure / balance sheet
5 -- Price
In all three situations, the price is rated among the last decisive elements and the primary roles are played by company focus and strategy, as well as the quality of the property and the managerial act.
Question 12: The large majority of the respondents indicated that the crisis has impacted their aversion to risk in the sense of increasing it. Specifically, they are now more prudential and develop safer strategies. Some investors nevertheless argue that the crisis has not impacted their risk perception, or even that it presents them with new opportunities they intend to seize.
Question 13: The Syrian investors tend to be focused on medium term investments, however they also pay balanced attention to short- and long-term projects.
Question 14: Like the Jordanian and the Egyptian property companies, the Syrian ones have also declared to use performance-based benchmarks which support the overall development of the regional real estate sector.
Question 15: The future intentions of Syrian property companies refer primarily to increasing the levels of operations and this could be attributed to the rapidly increasing population which creates needs for more real estate projects. In terms of the investors who declared they would be decreasing their operations, they mostly cited resource insufficiencies.
Question 16: In terms of future investment decisions, the Syrian property companies reveal a similar trend to Jordan in the meaning that emphasis would be placed on residential building.
Question 17: At the level of the countries in which they intend to invest, the Syrian property companies have mostly stated Syria and this is explicable by the incremental demand in real estate properties within the country. Some investors have also stated that they would be investing in Egypt or in the UAE.
Questions 18 through 35:
The reforms of the global financial system generate very important impacts on the returns of property companies. For Syria however, a larger importance is placed on the national reforms, which have been slow and need to be addressed.
The financial regulation reforms in the local and global market have a crucial impact on the PC's returns
The global interest rate risk reveals a very important ability to impact the PC's returns
The local inflation risk is critical for the property company's ability to generate returns
The local and regional market risks are critical for the returns of the property companies
The local and regional macroeconomic performance is critical for the PC's returns
The local and global macroeconomic trends and expectations are important for the PC's returns
The price of the stock is very important for the long-term financial stability of the firms
The liberalization of the Middle East financial system is essential for the property analysts, investors, traders and policy makers
The national and regional outputs play a very important role in the returns of the property company
Inflation is crucial for the PC's returns
The interest rates are crucial in the PC's returns
Diversification is essential to reduce the risks
Diversification is very important for the generation of incomes within the Middle East emergent property markets
The opening of new stock markets in the Middle East generates very important impacts upon the strategy of the property company
The establishment of the DSE is critical for regional diversification due to its ability to enhance the access to financial resources
The creation of the DSE is important for the PC's returns and profits
The opening of the DSE would play a critical role in the performances and returns of the emerging property market in the Middle East.
6. Discussion
At this particular level, emphasis would be placed on the combination of the answers retrieved through both primary research within the three specific Middle East markets, but also throughout the review of the available literature. With the aid of the mentioned research questions, the overall research aim would be attained. Specifically, in light of the findings, an ultimate answer would be provided to the question regarding the importance of the emergent property markets in the Middle East.
The situation within the real estate market in the Middle East is characterized by two elements. On the one hand sit the category of region specific issues, such as the emerging nature of the industry, as well as the entire economy, but also the fear of political instability. On the other hand however sit the features which reveal commonality with the real estate markets in the western hemisphere. And the most relevant example in this sense is represented by the tremendous impact the crisis commenced within the United States real estate market had upon the property markets in the Middle East region.
In other words, the property companies in the Middle East are faced with more complex demands as they have to devise means to respond to the multifaceted challenges which emerge both from within the countries and the region, but also those which impact the region from across the globe.
The return generated by the investments made by the property companies in the Middle East is a primary concern in the decisions to invest. Additionally, this return is often perceived as being impacted directly by a wide array of regional features, such as politics, economy or market trends. At a general level, property companies accept the lower level of return generated by real estate investments in the region. This finding supports the theoretical background according to which the real estate returns in the Middle East region are among the lowest at a global level. And these returns refer not only to property investments, but also to securities.
Within the Middle East, a constant problem remains the lack of transparency and the insufficiency of information. As it has been revealed throughout the previous section, the countries analyzed, with the exception of Egypt, reveal low levels of informational infrastructure. The table below presents the comparative infrastructures in Jordan, Egypt and Syria, as well as those in the United States and China, the global leaders at the level of information infrastructure. Additional columns are added to reveal the global position of the countries:
Jordan
Egypt
Syria
U.S.
China
Telephone main lines
501,200
96
10,313,000
21
3,871,000
41
141,000,000
2
313,680,000
1
Mobile telephones
6,014,000
85
55,352,000
19
9,697,000
66
286,000,000
3
747,000,000
1
Internet hosts
42,412
92
187,197
67
8,114
439,000,000
1
15,251,000
6
Internet users
1,642,000
78
20,136,000
21
4,469,000
52
245,000,000
2
389,000,000
1
The data to compose the table was retrieved from the website of the Central Intelligence Agency (2011).
Up until recently, the problem was relatively common globe wide and it did not constitute a critical issue; furthermore, it was accepted as a constant of the investment activity. More recently nevertheless, the need for information has become more pressing. This situation was created as a result of globalization which supported the efficient propagation of information. In the era of advanced technological applications and information revolution, investors are in dire need of continuous updates. In spite of the advantages they have already made in this field, the countries in the Middle East have yet to fully address the need for efficient information and increased transparency. In this line of thoughts, in order to enhance the role they play within the global real estate community and also to attract more investors, the access to information and transparency in the industry has to be increased.
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