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Halliburton and UAE real estate: What’s the connection?
Posted on 01/20/09
Halliburton and UAE real estate: What's the connection?
In 2007, the well known oil extraction and engineering service Halliburton moved its corporate headquarters to the United Arab Emirates. This was a strategic decision made by the company to improve its profit margin, costs and business operational goals. Quite simply, the extremely corporate friendly environment within the emirate of Dubai and the location of Dubai to some of the Worlds largest oil reserves meant good financial tidings for the company.
So what does Halliburton have to do with real estate in the United Arab Emirates? First it is an example of just how much of an incentive the financial regulations of Dubai are for foreign corporations. Secondly, it is an indicator that commercial office and operational space might be a favorable investment. Halliburton is not the only example of larger corporations setting up shop in the UAE. The majority of U.S. fortune five hundred companies also have a presence in the UAE.
If that's not convincing enough, there are also plenty of forecasts for commercial space in the UAE that point in one direction, up. What are these forecasts, where are they and how accurate are they? Some forecasts are proprietary information, but others are not. In fact, the very fact that some commercial forecasts are proprietary is an indicator that something is worth concealing, specifically, how commercial space valuation is more specifically thought to move.
For those who didn't read December 19, 2008's blog, please refer to the following link for an illustration of commercial space valuation forecasts within Dubai. If these forecasts are accurate, it probably implies one very important thing to commercial investors, i.e. appreciation. In the interest of understanding the reality behind these forecasts, it can be a good idea to see why they are so good. Typically, some of the variables that influence commercial real estate are the following:
Supply and demand
Economic growth
Regulatory environment
Regional commercial development
Industry specific expansion
In the case of the Dubai, many if not all these factors are present. In many cases, the presence of these factors leads to a rise in valuation and/or leasing costs which for land and commercial property holders can sometimes lead to sizeable returns on investment (ROI) So what's the connection between Halliburton and UAE real estate? It should be clear, but the connection is simply commercial attractiveness of Dubai. When combined with other economic factors such as those listed above, this commercial attractiveness can also lead to increasingly expensive commercial property.
Posted by A.W.Berry
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About me: I am an American with a diverse heritage and have lived in several countries. My work experience and background centers around corporate, marketing and financial areas and my educational background includes a M.B.A. in Finance and Marketing in addition to a M.A. in Philosophy.
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