Cairo real estate leads the region.

Cairo is said to be among the top 10 real estate markets in the world, according to the Global Property Guide issued from Manila, and is likely to be a central focus for the Next Move real estate exhibition to take place from 28 April to 1 May in the Egyptian capital.

The opportunities in Cairo and Egypt at large contrast with dramatically falling expectations in Dubai, which has dominated Middle East property development for several years. It also reflects a changing dynamic for inward investment, with Qatar overtaking the UAE among the Gulf states.

According to Ahmad Ghozzi, Chairman and CEO of Next Move's organiser, ACG-ITF: "there is still a large gap between supply and demand [in Egypt] which developers can capitalise on, especially in family-centred projects, as there are about 500,000 marriages annually."

Ghozzi points out that financing is not debt-based in Egypt (as elsewhere in the Middle East) with property purchasers utilising liquid surpluses. "The portion of payment that is financed is up to 3% only and there is great demand for housing units in Egypt." There is a deficit of housing of up to 350,000 units per year, he says.

Qatar overtakes UAE

Inward investment to Qatar.

Meanwhile, the UAE has lost out to Qatar as the most popular stock market for fund managers investing in the Middle East and Africa according to US research firm, EPFR Global.

The region's fund managers had 19.3% of their assets invested in Qatar at the end of December 2008, EPFR reports. In contrast, managers had just 16.4% invested in the UAE's three stock markets: the Abu Dhabi Securities Exchange (ADX), the Dubai Financial Market (DFM) and the Dubai International Financial Exchange (DIFX).

At the end of June 2008, asset managers held 28.9% of their assets in the UAE and 14.5% in Qatar, the research company reveals.

"I am surprised it [the flight of investments to Qatar] did not happen earlier," says Fahd Iqbal, Vice President of Research at Egyptian investment bank EFG-Hermes.

Confidence in the Qatari economy has been boosted by the decision by its sovereign wealth fund, the Qatar Investment Authority (QIA), to buy shares in the country's banks.

To date, the fund has bought 5% stakes in both the Commercial Bank of Qatar and Qatar Islamic Bank (QIB). Shares in the two institutions have been trading at 30% below their prices in November 2008.

Qatar could now extend its lead over the UAE as a centre for investment if the growth of the countries' economies matches predictions this year.

Qatar's gross domestic product (GDP) is predicted to grow far more quickly than those of its regional rivals in 2009, with the growth rates of the UAE and Saudi Arabia expected to be almost flat.

Some institutional investors say the UAE markets' dependence on the troubled real estate and banking sectors is the reason for the flight of investments to the Doha Securities Market (DSM).

"I can hardly find a defensive stock in the UAE, while there are plenty in Qatar," says Reza Hadizad, Managing Director and Head of Asset Management at Dubai-based asset manager, Arqaam Capital.

Overall, however, institutional investors have cut their exposure to Gulf Co-operation Council (GCC) markets and Egypt since June 2008. According to data from EPFR Global, funds cut their holdings in Saudi Arabia from 14.8% of their total portfolios in June 2008 to just 9.2% by the end of December.

Fund managers specialising in the region cut their exposure to Egypt from 13.3% to just 12% over the same period.

While foreign direct investment in the Middle East fell 21% in 2008, according to the United Nations Conference on Trade and Development (UNCTAD), the Economist Intelligence Unit (EIU) predicts that the GCC region will nevertheless constitute a US$2 trillion economy by 2020, based on its development as a trading hub.

from Mutaz Basha, Dubai Office