Investors must check out business models

When asset prices rise, they attract people to invest — for reasons that have nothing to do with the asset, but with its movement.

- BY SAMEER LAKHANI Special to Gulf News

It is a sense of some curiosity then, that the behaviour is somewhat asymmetric. The rise unleashes a flood of buyers, but a fall, especially into undervalued territory, takes time to work its 'magic'.

This is true especially in the case of real estate, where distressed assets often are mired in litigation, and require patience and resources to reach the finish line. We have seen that in the case of projects such as the Pentominium, Marina 106, Marina 101, Al Saqran Tower in JLT, and others, but nothing has quite caught the zeitgeist as the Palazzo Versace Hotel, which has been periodically on the auction block for the better part of a year.

The long gestation period these deals require to get over the line make intrigue look like child's play. But it is exactly this nature of deal that shows the twin-sided nature of the property market:

■ The increasing complexity of the deal at the value end of the spectrum require increasing expertise that is attracting not just developers but institutional investors.