$1bn MAF investment in Syria looks well timed

Early next year Dubai property giant Majid Al Futtaim will award construction contracts for its $1 billion shopping mall, entertainment and hotel complex 17 kilometres outside Damascus, the largest ever foreign direct investment in Syria. Phase one will open in 2014.

The Khams Shamat will likely include a Carrefour hypermarket and Kempinski hotel. Meantime, Emaar Properties $500 million Eighth Gate project launched in 2006 is well advanced. And Qatar is investing $250 million in the Ibn Hani Bay resort near Lattakia on the Mediterranean coast, and a 550,000-square metre commercial and residential district in Damascus.

FDI growing

This year Syria expects to attract $2.5 billion in foreign direct investment. Outside of real estate there are opportunities in a 5,000MW expansion of electricity capacity over the next five years and a new terminal building for Damascus airport.

Gulf investors are well placed to participate in FDI in Syria which remains blacklisted by US companies and is frontier territory for European investors. Fellow Arabs better appreciate a compatible local culture but the economic opportunities are huge.

Syria has been going through a process similar to the emergence of Eastern Europe from the communist bloc since the handover of power to a younger generation a decade ago. The war in neighboring Iraq was a significant setback, so too the alleged involvement in the assassination of Lebanese Prime Minister Rafiq Harari in 2005.

Growth potential

But with a large and well-educated population as well as major oil reserves Syria has tremendous potential for economic growth over the next decade. Tourism has the potential to increase significantly. Presently the country only has one five-star deluxe property, the Four Seasons Hotel in Damascus that opened in 2005, owned by Saudi investor Prince Alwaleed.

Unless something happens to destabilize local politics the prospects have seldom looked brighter for Syria as the Middle East moves to a new post-war situation in Iraq. Naturally as Iraq returns to growth its neighbor is benefiting with improved trade and business links.

You could also imagine the international community, including the US, gradually opening up FDI to Syria as a part of this process. McDonald’s and Coca-Cola are surely the investors of tomorrow. You can already see most of the world’s auto manufacturers, including surprisingly enough GM.

Majid Al Futtaim is well known for his clever investment timing, and by 2014 the Damascus market will be just right for a large mixed use development like Khams Shamat. ArabianMoney visited Syria last week and was impressed by the advances made in the past decade. But clearly the best is yet to come and frankly so much still needs to be done.