Recent changes in Syria's foreign ownership laws should boost international interest in the property market, industry experts say.
Foreigners have been allowed to own property, but restrictions made it a difficult process, says Hussein Yousef, the commercial manager for Aram Real Estate, a property firm in Syria.
A 2008 law required non-Syrians to obtain government approval before they could buy property. In addition the law limited what they could buy and when they could resell the property. And if a foreign owner died, his heirs were required to sell the estate within a year.
This month the government approved changes in the law, removing many of the restrictions.
The new measures are part of a series of initiatives by the Syrian government to open the country to international business. In September, Abdallah Dardari, the deputy prime minister for economic affairs, announced plans to attract US$55 billion (Dh202.01bn) in foreign direct investments in the next five years.
"Reforms in the regulatory environment have definitely encouraged foreign investors and developers to enter the market," said Saadallah al Abed, a senior consultant with Colliers International.
Syria is already attracting the attention of many of the UAE's largest property companies, including Emaar, Arabtec and Drake and Scull International. In many cases the developers were offered land at discounted prices. "Developers are capitalising on the opportunities generated by the huge demand, both domestically and demand on the side of the Syrian expatriate community, said Mr al Abed.
The Syrian market remains "highly undersupplied" in most property sectors, said Mr al Abed. New projects will not be able to keep up with demand, which has kept prices at record levels, despite the global economic crisis, he added.
"Supply entering the market is trivial and can't keep up with demand generated domestically, let alone expatriates' demand," he said.
But corruption and bureaucracy continue to hamper the country's growth, analysts say. Jones Lang LaSalle ranks Syria among the "least transparent" countries in the world.
"Business deals are almost always undertaken through personal contacts and require means which would not normally be acceptable in more transparent markets," Jones Lang LaSalle wrote in its annual transparency report.
"It seems to be a fairly tricky place to do business," said Steve Morgan, the head of Cluttons's UAE office. "But there are opportunities in the right places with the right people on the ground."
Syria will have to improve its infrastructure and mortgage laws before it can grow dramatically as an international property market, Mr Morgan said.
"It needs to learn from other emerging markets," he said.
The changes in ownership rules should make Syria particularly attractive to buyers in the Gulf region, Mr Yousef said.
"It will raise prices, I think. That will be good for real estate," Mr Yousef said. "There are many people interested in owning property."
In recent years, Syria's government has been slowly liberalising its business laws, hoping to attract more international companies. The Damascus Securities Exchange was created last year, and private banks have been allowed to expand their operations.
Spurred by the economic reforms, the country's GDP has been growing at 4 to 5 per cent a year since 2005, the World Bank says.
HOME AWAY FROM HOME FOR UAE COMPANIES
Syria is already playing a key role in the diversification plans of several of the UAE’s largest property companies. The list includes:
The Dubai developer created Emaar Syria, a partnership with Invest Group Overseas (IGO), to build The Eighth Gate, a 26 billion Syrian pounds (Dh2.03bn) mixed-use development outside Damascus.
In 2006, the UAE developer formed Palmyra Real Estate, which aspires to become one of the largest residential developers in Syria. Projects include Jasmine Hills in Yafour, a town outside Damascus, and Oak City, a master-planned development on the road linking Damascus and Amman, Jordan.
The UAE's largest construction company has been working with Emaar on The Eighth Gate. In February, it announced a contract to build the US$120 million (Dh440.7m) Yasmeen Rotana Hotel in Mazzeh, a 35-minute drive from the Damascus International
Drake & Scull International
A specialist in mechanical, electrical and plumbing construction, Drake & Scull announced its first contract in Syria in September, an Dh85m deal to build out the Rotana Gardenia Hotel and furnished apartments in the city of Homs.
Majid Al Futtaim Properties
In September, the developer of the Mall of the Emirates started work on Khams Shamat, a 1 million sq metre, $1bn complex 17km west of Damascus. It will include hotels, restaurants and shopping centres.