DEFAULT OF DUBAI WORLD STATE FUND MAY LEAD TO ‘CATACLYSMS’ IN REAL ESTATE MARKET OF ARMENIA

ArmInfo
2009-12-08 18:53:00

ArmInfo. The default of the Dubai World state fund may lead to a crisis
of real estate market in Armenia, Candidate of Economic Sciences
Samvel Avagyan said at today’s press- conference. According to him,
the real estate market in Armenia has stabilized to some extent since
September 2009, however, slight price growth is observed in certain
segments of this market today, particularly, in the sectors of elite
buildings construction. The economist thinks that such a trend in
the given segment is conditioned by the new interests of Armenian
Diaspora representatives who earlier preferred directing their savings
to the initial housing market by investing their funds in incomplete
construction. Today these investors invest their money in the secondary
market, i.e. they prefer acquiring exclusively finished housing.

Avagyan thinks that if the Dubai World state fund fails to redeem
its indebtedness before December 14, 2009 or establish agreement
with creditors on prolongation of the redemption period for 6 months,
which is quite probable, then a global crisis of the real estate market
is practically inevitable. In Armenia, like in many other countries,
this crisis will considerably decline investment in construction and
decrease the demand for housing.

As regards the measures that Armenian Government may take to
avoid negative consequences, Avagyan stressed that 4-fold decline
in construction was fixed in the segment of housing construction
by private persons while in the segment of housing construction by
private companies only 4% decline was registered. In this context,
Avagyan thinks that Armenian Government is unable to take any
measures. "The government cannot force citizens to build housing",-
the economist concluded.

From: Emil Lazarian | Ararat NewsPress