Tate Capital to buy 'distressed assets' in UAE

DUBAI // Tate Capital Real Estate Solutions, a US-based property firm, is looking to acquire "distressed assets" in the UAE property market that have been hit by the downturn. The company has begun a two-month study to identify opportunities for taking over projects that will provide a long-term revenue stream. According to the company's president, James Tate, there is now a "two-year buying opportunity" for property assets in downturn ­markets. He said the study would look at opportunities in the residential and commercial sectors, and target projects that were half or fully completed. The company would also consider taking over land for development. "We're going to look at what gives us the best opportunity to create an income stream," said Mr Tate, who is in Dubai on a business visit. "Whether it's residential and/or commercial will depend upon how much product's on the street, what the demand is and how quickly that product gets ­absorbed." The UAE is the second phase of the company's acquisition plan. The first will be for investments in the US because of the immediate opportunities there. Tate and its business partners would spend an initial US$250 million (Dh918.2m) on investments in the US, although this figure was likely to treble, Mr Tate said. He said it could take a year before the company made any acquisitions in the UAE. "We're not looking at a shotgun approach. We're looking at individual acquisitions that make economic sense, whether that's one, two or 20 buildings." Mr Tate said the most challenging part of the study would be identifying where the demand was in the market. Dubai's property boom was mainly fuelled by speculative buyers, causing prices to soar and creating a market based on unrealistic assumptions. "We need to figure out where the market is going to come from and how we fill that void, and it usually has to do with price," he said. "We like to use the example that 'water seeks it own level', and so does real estate. "Prices will finally hit a bottom, but nobody knows where that bottom is until it hits. This is a new market, you don't have history to fall back on to see the previous trends, but it will find its own level." A report by Jones Lang LaSalle on Monday said that more than half of Dubai's residential and commercial property projects due for completion between this year and 2012 had been put on hold or cancelled, creating opportunities for investors to take over troubled projects at a discount. A number of international investors are thought to be "waiting on the sidelines" for good deals in the emirate. "Dubai has good attributes - it has good infrastructure and is a beautiful city," said Mr Tate. "This and the fact the Government has its finger on the pulse and wants to succeed will help it to recover quicker." Locally based property firms are also looking to buy distressed assets in the region and elsewhere as a result of the global property slump. Cirrus Developments said on Monday it would launch an international fund to buy assets in Dubai, the UK and the US. agiuffrida@thenational.ae