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Ashleigh Coaxum

A Study in Contrasts: Real Estate Students Travel to Abu Dhabi, Dubai and Istanbul

by Ashleigh Coaxum Tuesday, February 10, 2015

Over winter break, 14 Wisconsin Real Estate MBA students traveled to Abu Dhabi, Dubai, and Istanbul, Turkey for a 10-day study tour to gain real-world experience and insights into the political, legal, economic, and cultural dimensions of doing business abroad. During our visit, they met with brokers, planning authorities, money managers, developers, investors, lenders, attorneys, and alumni to gain first-hand insight into these emerging real estate markets. We also packed in some cultural highlights, including a camel ride through the Dubai desert.

The first stop on the tour began in Abu Dhabi, United Arab Emirates (UAE). Abu Dhabi is the government hub of the UAE and we enjoyed visiting the notable Sheikh Zayed Grand Mosque Center and the Emirates Palace. The first meeting was in Abu Dhabi with Paul Melkus, head of capital markets with Abu Dhabi Investment Authority (ADIA). ADIA is the world’s second largest sovereign wealth fund, and while the fund does not report portfolio metrics, third parties estimate funds under management to be over $770 billion.  

Following the day in Abu Dhabi, we traveled to nearby Dubai, the economic hub of the UAE and a glimmering city surrounded by desert sands on three sides. Upon arrival, we immediately noticed the massive-scale highways lined with high-rise apartments and the streets filled with businessmen and tourists.

The first meeting in Dubai was held at the Dubai Financial Center with Al Tamimi & Company, the top law firm in the Middle East, where we learned about the developing history of property law and legal practice in the Middle East.  

Next, we met with Dorothee Brisdoux, senior international sales manager at Emaar Properties, about the company’s immense and growing presence throughout the world. Emaar has impressive properties that include the Burj Khalifa (the world’s tallest building) and the Dubai Mall (the world’s largest mall). Dorothee explained that there is a growing number of international buyers interested in properties in Dubai. She also explained their master plan to develop the “Dubai Lagoons,” which will be almost double the size of their development around the Burj Khalifa. The projects are extraordinary in both size and beauty and represent incredible feats of engineering.  

While in Dubai, the group also visited the Meydan Racecourse, which is part of the 200-million-square-foot Meydan City development. Meydan translated in Arabic is “meeting place,” and includes a marina, a five-star hotel, two race tracks, and a Grandstand that includes another hotel, corporate suites, and a horse racing museum. The track opened in 2010 and is a vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai.

Following the spectacular time in Dubai, we traveled to Istanbul, Turkey. Turkey has a dynamic economy, rich history, and a sophisticated culture fusion of societies east and west, past and present. At the heart of the former Ottoman Empire, Istanbul nicely blends European and Middle Eastern influences, and locals refer to the “European” and “Asian” sides of the city as being very distinct. Second-year student Jade-Lin Chue said: “We crossed the Bosphorus to visit the Asian side of Istanbul. Compared to the European side, it is the Hoboken to Manhattan. There were lots of fish markets, locals, and fewer brand-name stores. Most of the population seems to live on this side, as rents are cheaper. If you want a more authentic, less touristy take on Istanbul, this is the place to be!”

Our first meeting in Istanbul was with JLL Turkey. Representatives from JLL graciously hosted the group in their office and provided an insightful overview of the local commercial real estate market. Representatives first discussed the macroeconomic drivers of the country that are currently influencing its growth prospects before later diving into sector-specific details.  

We later met with Ms. Ozlem Gokce, the vice chairman of GYODER and general manager of the Extensa Group. She presented on behalf of GYODER, the Association of Real Estate Investment Companies in Turkey, and provided a wonderful overview of all sectors of the market in Turkey. Joe Mahoney, a second-year MBA candidate, said: “Ms. Gokce’s in-depth knowledge and leadership in the Turkish market gave us all a deep understanding of the opportunities and challenges that an emerging market such as Turkey is working through.”

The group was also fortunate to meet with Savas Gencer from Amstar, a real estate investment management firm that acquires, develops, and manages all major property types in the U.S. and select international markets. The meeting focused on Turkish market conditions and Amstar's development of several Turkish shopping centers. Following Amstar, we met with Inci Aksun, VP of the Consumer Banking Marketing division at Akbank, one of Turkey’s largest banks and mortgage lenders. Ms. Aksun described how Turkey’s demographics and interest rates increased mortgage originations over the past two years. However, the significant rise in interest rates towards the end of 2014 and into 2015 has suppressed the market. MBA student Karen Guthrie explained: “While the majority of Turks prefer to own their home, only about 30 percent finance the purchase. The loan-to-value is around 60 percent on a typical mortgage financed by Akbank. From this visit, we learned a lot regarding lending practices in Turkey.”

On our final day, we met with the Center for Strategic Thinking in Real Estate, a Turkish-based real estate think tank. Students learned four key considerations for foreign real estate investors considering Turkey: 1) Developers do not purchase land in Istanbul; rather, they partner with landowners and negotiate ownership breakdown of the asset and cash flows; 2) You need a local partner to enter Istanbul’s real estate market; 3) The practice of “Strata” development, which is the pre-selling of floors of a building to avoid taking on a mortgage, is being used less frequently. This will provide an opportunity for foreign capital to invest in Istanbul; and 4) Foreign investors cannot use the same real estate investment practices in Turkey that are successful in the U.S.

The contrast of a newly-built city with the 8000-year-old history of Istanbul provided the perfect opportunity to immerse ourselves in two distinct real estate markets with ever-changing macro and microeconomic conditions. We are grateful to have had the opportunity to delve deeper into each market and enjoy the many cultural excursions in Abu Dhabi, Dubai, and Istanbul. We're also very appreciative of the support of the James A. Graaskamp Center for Real Estate and Professor Qureshi for his tireless work to make this trip a success.

Ashleigh Coaxum graduated Cum Laude in 2008 from Spelman College with a Bachelors of Arts in Economics and a minor in Business Administration. She enjoys traveling, cooking and becoming a budding watch enthusiast. Ashleigh is excited to further advance her skills and expertise by pursuing her MBA at the University of Wisconsin- Madison in the James A. Graaskamp Center for Real Estate.