Cityscape Dubai: What's next?

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Nicholas Maclean of CB Richard Ellis.

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Cityscape Dubai is here again. Nicolas Maclean, Managing Director of CB Richard Ellis Middle East talks about the pressing issues that could affect this year's anticipated property exhibition. Kim Latham reports.

This week will once again see thousands of visitors walk through the doors of the biggest event on the property calendar at Cityscape Dubai.

In May, Cityscape Abu Dhabi saw investors embark on intense spending sprees on cash-cow developments across the UAE. Newspapers and magazines served up glowing reports on the booming industry while developers dangled delivery dates of extravagant lifestyles.

What a difference five months makes.

Now, reports on insufficient regulations, rife corruption charges, construction delays and residency visa limitations all appear to be somewhat plaguing the property industry here. Are speculators simply being overly-cautious in casting a cloud over the industry or are the good times really under threat?

Many believe that Cityscape will be a good indication of what is to come.

"It will be an interesting Cityscape this year because sentiment is clearly different from the time of the last Abu Dhabi exhibition because of speculation. This is the first time there has been public speculation about the market turning, says Nicholas Maclean, Managing Director of CB Richard Ellis, Middle East.

Speculation appeared to stem from a Morgan Stanley article published a few months ago which suggested a 10% downturn in the real estate market. This coincided with more recent market meltdowns that has seen Gulf economies being hit following the US financial crisis.

A 20% drop in property share prices by 2011 as some analysts are predicting and numerous project delays has led investors to act with a little more caution.

Nevertheless, one can inevitably expect the usual big names to launch new projects and developments although according to Maclean some developers are bringing forward project launches originally scheduled for Abu Dhabi Cityscape next year to the Dubai exhibition.

Whether this is down to fear of the arrival of the much-talked about ‘bubble burst' or simply that developers are eager to launch and cash-in on more prime developments is up for debate.

"There are two types of people who exhibit at Cityscape. Those who are very proud of their schemes and the projects are ready to go and those who use it as the first stage of feasibility.

So, here's the wackiest looking building you can think of and let's gage the reaction, if it's bad we won't do it. So there's no more than a model on some conceptual designs. It will be interesting to see how many of those first stage feasibility schemes will be exhibited this year," says Maclean.

Cityscape sentiment

Maclean believes Cityscape Dubai could very well be a subdued event this year, in part due to a lack of international money as a result of the global impact. Nick Turner, Managing Director of Group RCI agrees.

"My view is that the UAE will be impacted by the global economic slowdown, particularly from markets that used to be very popular for purchasing real estate as investments, like the UK and Germany.

Traditional developers will see from those European markets, and probably markets such as the Indian Sub-continent where inflation is having a huge impact on the Indian economy, you'll see a real slow down in traditional real estate sales," he says.

One key factor causing buyers to reevaluate real estate portfolios is the issue of immigration. With around 300,000 people a year entering the UAE, supply clearly needs to meet demand in order to fill the plentitude of buildings currently under construction.

On the other hand, suggestions that the Government may restrict the number of residency visas to limit the number of people living here are bound to impact the industry and affect the price of real estate if such measures are put in place.

Corruption

Another major cause for concern is the number of senior figures under arrest for alleged corruption within the real estate sector. Such allegations and publicity clearly does nothing to promote a safe and stable environment for investors.

Asked if Maclean believes there are currently enough laws to protect investors here, he says:

"No, because clearly some developers are suggesting delivery dates which are just not feasible and they are accepting deposits on the back of these dates. Some developers have been giving back deposits to people without any inflated value which is not acceptable to the government or the market place and this can't be allowed to happen. There needs to be prime legislation that allows that to go away so if people want to come here as an investor, they need to be protected by some form of regulation," he stresses.

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