Nasr M. Nasr: “casual and unorganized development of areas surrounding cities will result in catastrophic consequences for the real estate industry” [Archives:2007/1111/Business & Economy]

By: Yemen Times
The development of the real estate industry in Yemen a complicated issue, while we see land disputes filling commercial courts and we hear about the associated risk of investing in real estate, apart from the increasing costs of Cement and Steel which raise the cost of such investments, population growth especially in urban centers result in enormous stress on the real estate industry. YemenTimes has interviewed the published of Yemen's first real state magazine and asked him a few questions around the subject.

Can you brief us on Al-Aqaria tabloid and its scope of work?

Al-Aqaria magazine is the first publication in Yemen concerned with the real estate and construction sector in Yemen, published by Future legacy company. Since the establishment of the publication in 2007, two pilot issues has come out, and starting January 2008, the magazine will be issued on monthly bases, due to the high demand on the magazine. We also plan publishing special supplements which on specific areas or for specific activities such as lease, purchase and constructions.

The editorial section of the magazine will also tackle the issues facing investors in the real estate sector, ranging from home owners to large-scale investors, and will communicate concerns to decision-makers in both the privet and public sector in order to shed the light on the problems which constrain the development of this sector. The magazine will also undertake investigative reports and expand our classified ads section to be more inclusive and comprehensive. Additionally, we have signed a Memorandum of Understanding with Al-Aqaria Satellite Television to expand their coverage to include Yemen, as well as help us provide regional news of the real estate business which might affect the local market.

How do you see the development of the real estate sector in Yemen? And what are the drawbacks that the sector needs to overcome?

Yemen is witnessing a large real estate revolution, especially given the investment laws which have been relaxed, taking into consideration the best practices and derived from the best legislations in the region in order to promote investments. The real estate sector in Yemen is bound to attract the largest portion of investments in the country, however, the prime obstacle which limits attracting more investments in this sector is the land-disputes problem and the inefficient real-estate registrar agency.

The government of Yemen is trying hard to solve these problems, however the main mechanism for resolving disputes, i.e. the judiciary, is an inefficient mechanism, there are simply too many land and real estate related disputes. And also the increase in real estate prices, the increasing costs of construction and raw materials, and the highly inefficient mechanism of construction make investing into real estate a more difficult decision.

Time and again we hear news about massive residential and construction projects in the country, but none of these projects have materialized yet. How do you evaluate the attractiveness of such projects to investors?

We have also heard of such announcements during last April's Invest-in-Yemen conference, however, since then, we haven't seen any real progress in terms of realizing these projects, perhaps due to the reasons I just mentioned. Or perhaps due to financing problems as the banking sector is reluctant to finance large construction projects due to the risks associated or perhaps due to the non- affordability of the banks to finance such projects, according to several investors we have dealt with.

What effect does the increasing cost of cement and building materials have on the construction business in Yemen?

Cement and Steel are the lifeblood of the construction industry, however, due to the large demand on these two products in Gulf countries, there is a global increase in the prices of these two products. And Yemen has been affected by the increase especially since the legislation regulating market prices and supply of these products are not being practiced, and the existence of a huge black market in Yemen where such commodities are auctioned to the highest bidder.

What are the problems of urban planning in Yemen, considering the population explosion and the rapid growth of cities?

One of the prime issues which face Yemen's urban development is that there is no planning for the areas to be developed surrounding the cities, resulting in casual and unorganized development of these areas in turn resulting in catastrophic consequences for the real estate industry and home owners in such areas. In a conference in 2001 in which I participated in, it was anticipated that real estate development increases by 15 percent per year in Sana'a, while other infrastructure services and urban planning moves at a pace of 3 percent, the conference pointed out that in 2010, 70 percent of Sana'a city will suffer from shortage in infrastructure services such as Water and Sewage, and now we are well on the way towards that.

Issues of land ownership and property registration makes investment in real estate a risky one, how do you comment on this statement?

This is a very known fact in our industry, you can pay a visit to a commercial court and see for yourself the different cases and people disputes, or even go to the real estate registrar to be shocked of the sad realities we have to live with.

From your experience through Al-Aqaria, what trends do you see in the real estate market?

In spite of all the problems we have discussed, Yemen has an exceptionally interesting and possibly lucrative real estate industry, due to the geographical diversity and the tremendous increase in urban populations which demand housing. These factors should attract investors to enter into the sector. However, the ball is in the government's court to facilitate these investments.

Any last comments?

I'd like to thank you for the opportunity and I hope we will see the sector developing in a faster pace for the sake of our country's prosperity.
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