Subdued, sombre, reflective. The headline writers might almost have made up their minds about Dubai's property event Cityscape during yesterday's opening, when the crowds of years gone by were noticeable by their absence.
But the truth is that this Cityscape has not been about the big, world-beating announcements, or the push for sales. Many of those present said they were more interested in branding, speaking with the media or networking. There were around a fifth less exhibitors than last year – more than 200, according to organisers, though the official list only showed 121 – a dramatic drop on the 954 firms that touted their wares in 2008, when the real estate market was at its peak.
Firms that, at prior shows, had dominated the headlines – developers such as Nakheel, the property arm of troubled conglomerate Dubai World – this year shied away from bold, multibillion-dollar announcements, preferring to keep a low profile.
Tanmiyat, the main sponsor for the event, seemed to hit the nail on the head: “The problem with Dubai is, of course, that a lot of investors ran away and have no confidence in the market after the crisis. The key question is how to bring them back to the market,” said Dr Wan Muhamad Hasni Wan Sulaiman, advisor in charge, Tanmiyat.
Transparency – always a crucial requirement – is now more vital than it has ever been.
All in all, it made for a confusing first day for the Cityscape event, now rebranded as Cityscape Global. The reincarnation may not as clumsy as it sounds; as the Dubai property market has slumped, many of the emirate's developers have found greener fields overseas as they wait for the Dubai hiatus to complete its cycle. It also gave some international firms an opportunity to showcase projects from destinations as varied as Paris to the Cayman Islands.
Perhaps the day's best moment came from contractor Arabtec, which announced that it had won a deal worth well over $1bn to build villas in Saudi Arabia. It was a fantastic fillip for the company, and came only a day after a report from Bank of America Merrill Lynch cast doubt over Arabtec's future pipeline of work outside the UAE.
On the other hand, the news that Paolo Moscovici, head of JP Morgan’s Middle East private banking unit, had predicted that Dubai real estate prices could still sink a full 80 percent from their 2008 peak, cast something of a pall over proceedings.
Not everyone agreed with that assessment, needless to say. Damac Properties, which is pursuing a policy of pushing out its existing commitments to Dubai and Abu Dhabi in the next seven months, before building again to meet an expected market return in three years’ time, disagreed with Moscovici’s assessment.
“We don’t think it will fall that amount. One of strategies has been primary plots in primary locations and that has enabled us to charge premiums on our actual properties, because we have the best locations in each development,” said Niall McLoughlin, director of corporate communications for Damac.
“The kind of property price slides that other locations may have suffered. Yes there have been property price drops, but we don’t see it at 80 percent, absolutely not.”
But other market observers see some truth in Moscovici’s words.
“The buzzword right now is selective stability, so if you’re looking at a good product, I don’t think you’re going to see an 80 percent drop,” said Chris Waight, an associate director in Cluttons’ Dubai office.
“If you’re talking about something in the middle of Dubailand, that’s a little bit more risky – where there is no infrastructure or amenities, schools, etc, then yes, that could fall up to 80 percent.”
The fact is that Dubai's property market has had its headlong rush, and everyone - aside from the speculators - should be agreeing that it's for the best. For investors, real estate is supposed to be the bedrock of your portfolio, not its volatile asset. It tends to bring in lower returns over a longer period of time, not 20 percent hikes every year.
As Tom Barrack, keynote speaker at the Cityscape conference, and head of the one of the largest real estate private equity firms in the world, said: "In the last 15 years, we've all been traders, and it's created unfulfilled expectations for everybody."
Barrack should know; over the course of the last 20 years, his company, Colony Capital, has invested over $45bn, which approximately equates to the current GDP of Lebanon.
“This place was packed, four years ago, five years ago and you couldn't get in, because everyone assumed Dubai real estate was 20 percent a year upwards,” Barrack told a quiet audience.
“Everyone wanted to be here in the pack and avail themselves of that upward flex. Actually, a much better time is now, when there's still a confusion.”
That sentiment was admirable, but when asked outside the event whether his firm would be looking at further investments in GCC real estate outside Colony’s current stakes, Barrack pointed out – not unreasonably – that there were no plans for the time being, and that real estate would only turn a corner when financing improved.
The truth is that despite the plentiful expert comment about when the local real estate market will right itself, no-one really knows. Let’s hope that next year’s Cityscape has a little more to shout about.
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