Although a huge question mark looms over the future of real estate amid the global financial crisis, with many forecasters expecting an even bleaker 2009, Dubai Property Society’s (DPS) panelists agreed today that Dubai’s real estate landscape is positively changing. A trend towards reverting back to fundamentals, the creation of affordable housing and the changing of mindsets – a move away from short-term prospecting towards long-term equity investments – will determine the future of the sector in the coming two to three years.
The panel consisted of five representatives from the real estate industry, including Ahmed Ramadan, the Managing Director of Roya International, Blair Hagkull, the Managing Director in the Middle East for Jones Lang LaSalle, Iseeb Rehman, the Managing Director of Sherwoods, Ronald Hinchey, the Resident Partner of property consultancy firm, Cluttons, and Naaman Atallah, the Director of Sales, Emaar Properties.
Adel Lootah, the CEO of DPS and moderator of the panel discussion, asked the big question: How will the real estate industry move on from the current recession? “Dubai and the UAE has experienced unprecedented growth in the past decade and 2008 has clearly shown that this region is not immune from the world markets. We see in 2009 a shift back to real estate fundamentals, a flight to quality and direct investment in income properties,” said Blair Hagkull. “We expect 2009 to be a transitional year, with the market stabilizing throughout 2010 and improving in 2010 and 2011. Concurrent with the market maturing will be a greater focus on market transparency, regulation and affordability.”
Ronald Hinchey agreed with Hagkull, adding that, “Although it has a relatively short history, the real estate sector in Dubai has experienced growth rates far exceeding those almost anywhere else in the world. On the rental side of the market, demand and pricing have also skyrocketed. The expensive, impressive developments seen throughout the city were acceptable until now; however, the new challenge facing Dubai is bringing affordability back into the market.”
Speaking about the role of RERA, Ronald added, “We will see more corrections and regulations, and I think RERA is doing a great job so far. Through 2009, I think the focus will be on solving disputes between end-users and developers, and I believe that RERA should and will continue to enforce a fair game for everyone’s benefit.”
Lisa Dale, Partner Head of Al Tamimi & Company’s Property division commented on RERA’s role, noting that the Real Estate Regulatory Authority should concentrate on communicating more effectively with the public. “There is a lot of confusion in the market. Changes in the real estate market are happing very fast and the public does not know what to expect. RERA now has a good opportunity to make its presence known while providing a clearer picture of the current real estate regulations in effect and the new procedures to be implemented in 2009.”
Iseeb Rehman part of Sherwoods stressed the importance of changing the mindsets of investors in terms of asset values, stating that, “I am a strong believer of brands. I believe that real estate companies, which enjoy good reputations and have a respectful track record will survive the crisis. Therefore, companies should now focus more on professionalism, quality and innovation in 2009. I think that the current financial crisis will help the real estate sector come of age; we will see a shift back to fundamentals with a focus on quality and affordability.”
The Managing Director of Roya International, Ahmed Ramadan, the region’s leading hospitality solutions specialist, commented that the growth of the real estate industry in the last few years has positively affected the hospitality sector, and that any future changes in the real estate market will also play a role in changing the hospitality industry.
“It’s not only the real estate prices that have skyrocketed: the hotel rates in Dubai are some of the most expensive in the world,” he said, confessing that the hospitality sector “expects no growth in 2009. But as soon as the prices start to drop, we will see more people coming here, and many investors who look for long-term investments will start to come back to Dubai: tourists, workers, corporations, everyone. Affordability is now the key for the emirate’s future progress.”
Naaman Atallah, Chief Operating Officer, Emaar Properties, said: “The Dubai Property Society has been at the forefront in encouraging discussion on concerns related to the property sector. The session on Real Estate Outlook provides a platform for developers to actively partner in a confidence building process, which is crucial in identifying the opportunities that co-exist with the challenges in today’s economic climate. Developers must concentrate their energies on their projects, build a positive outlook and continue to inspire confidence in the economy.”
Adel Lootah ended the discussion noting that, “In conclusion, I believe that Dubai offers, and will always offer, more opportunities than risks. I agree with the panelists that there is a need to change the mindsets of real estate players who look for short-term profits. There is also a need to readjust the property prices to bring them – and keep them – in line with median affordability. In this way, Dubai will continue to have a healthy real estate sector.”
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