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Diversification is the key to success

Like Charles Darwin said, ‘adapt, migrate or die'. This is an important fact for modern businesses to understand, along with the cyclical nature of markets, in order to plan the use of resources and expertise accordingly. 

Companies need to consider their ability to adapt as a primary facilitator to long-term success or else be forced to restructure by changing economies or business environments.
Market forces

The real estate market is particularly cyclical in nature, as factors such as inflation, demographics, and economic growth affect prices and confidence in the sector. It's these changing market conditions that alert us to the fact that there is no status quo and that what goes up, must come down.

The Dubai market has seen some of the fallout from unrealistic expectations in a dynamic market; mortgage restructuring, speculation and crises of confidence have led to a drop in sales and speculative interest, forcing some property companies to make redundancies.

As the saying goes ‘don't put all your eggs in one basket.'  Real estate companies now need to listen to these market forces and understand what the market wants and needs, and more importantly, to know the needs of a changing market in advance.

This means not just a full range of property on the books, but also a full range of services on offer. Asteco's extensive portfolio of services, coupled with our experience, means that we've been able to grow across the sector as a whole; taking into account the varying needs of buyers, sellers and developers and being involved with these stakeholders at every stage.

Stages of the market

Perhaps the easiest way to explain the need for diversification is to consider the different stages of the market and the different needs at each stage. In the early adoption and growth stages of a property market, it's important to offer services which provide the necessary and relevant information to allow investors and developers to make informed choices.

Services such as market research, valuation, design and feasibility studies are critical as they enable the market to grow and evolve whilst managing future risk.

Clients are looking for companies that can offer them creative and competitive advice and solutions. The strength of the company's experience and knowledge is therefore critical.

It's important not to underestimate the importance of these early stages, in order for a strong sales market to be sustainable.

Although sales in some of the more mature markets in the region have begun to ease off, new developments haven't stopped completely, which means that companies that are able to provide services to cater for different elements of the market will continually be in a strong position.

As the market begins to mature and more properties progress towards the handover stage,  it gives rise to a multitude of consultancy-based services, which provide the market with what it's looking for; advice and support on how to manage investments most profitably.

The growth of the real estate sector, which at present is a nascent market, has given rise to the need for property valuation services by certified valuers who are in the best position to assess the market value of properties and to assist banks in the prudent management of risk associated with exposure to mortgage finance.

Strata management services have also become increasingly popular as the secondary market begins to emerge here in Qatar.

Strata management incorporates facility, property and ownership association management and represents the different branches available to property companies on which to build revenue and long-lasting customer relationships, as investors often look for companies to manage a portfolio of properties on their behalf.

The recent dip in the fortunes of the maturing property market has meant that some companies have left themselves wide open to risk. In the case of the GCC, sales have dropped. Redundancies are symptomatic of a market that didn't worry about the worst case scenario.

By having a diversified business, you're able to effectively manage your talent pool across a number of sub-divisions. This means the ability to move resources around your business and reduce exposure to market fluctuations.

A successful business needs to be all things for all people, servicing developers, investors and banks.

To do this requires constant monitoring of external market forces to understand the market fully and a willingness to think long-term and be able to quickly adapt to change to manage risk. Like any other market, it's survival of the fittest in the real estate sector.

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