Thus a time-horizon of 10, 15 or even 25 years is normal when investing in property. You simply trust that in the long-run property will at least match inflation in capital gain, and that rental yields will average out at a performance above competing asset classes.

Therefore any significant economic change that makes that investment more secure is to be welcomed. And any economic reform that improves economic fundamentals is likely to increase real estate capital values and probably rental returns.

At first sight GCC monetary union might be seen as a negative for real estate, as in all probability an independent regional central bank would set higher interest rates than those dictated at present by the peg to the US dollar.

Step forward the new GCC Central Bank which Abu Dhabi this week repeated its offer to host, and the GCC monetary union projected for 2010.  However, a gain in real estate capital value does not have to come just from rising prices. An upward revision of currency value will also just do just as nicely.

Buy real estate now in Abu Dhabi and you buy effectively in US dollars but have the possible added bonus of a conversion of the local currency into something stronger later on. Certainly if the GCC Central Bank was to follow the example of Singapore in its highly successful management of its currency, this would be the impact.

Finally, of course the physical location of the actual GCC Central Bank would be a coup for Abu Dhabi in terms of attracting business and particularly finance to the UAE capital. But this would most likely be a side issue in comparison to the impact of the monetary union itself on real estate capital values, at least in US dollar terms.

Edwina Baniqued