By Bernd Debusmann Jr. and Neil Halligan
Trust and oversupply were among the major talking points of Dubai's annual Cityscape real estate event
Aside from the usual launch of developments, sales pitches and announces, this year’s Cityscape in Dubai was abuzz with one word: trust.
At the Cityscape Global Conference, for example, Marwan Ahmed Bin Ghalita, the CEO of the Real estate Regulatory Agency (Rera) – the regulatory arm of Dubai Land Department – said that while trust is back in Dubai’s property market, developers who fail to deliver promises on projects risk ruining the faith shown by investors.
“My message to the developer is this: always deliver what you promise, because trust is there in the market; we don’t want to spoil the trust,” he said. “Whatever you promised, you always need to deliver it. We as a government regulator are always watching that, but the first line of defence is you. As a developer, always deliver what you promise.”
Speaking to Arabian Business on the sidelines of the event, Elaine Jones, executive chairman of Asteco, the Middle East’s largest real estate services company, said that the levels of trust in Dubai’s real estate market are bolstered by a number of well-known and commendable landlords and property developers. “Particular landlords and particular developers have earned trust, where they look after and treat their occupier with respect. There are a number of very good, solid developers who take great pride in what they do and believe that the customer comes first and should be treated with respect,” she told us.
While she readily admitted that there are still developers who have mismanaged their projects, Dubai’s real estate market has matured to a stage where such practices are not taken as a reflection of the market as a whole.
“It reflects badly on that particular development, but I don’t think it’s the whole market. I don’t think that we can generalise anymore,” she said.
“We shouldn’t because if we are looking at occupancy then we have professional landlords here who have been landlords for a long time now. They know how to treat their tenants and look after their own assets and occupants very well.”
She adds how important this is to keep in mind. “This is a critical question. How well is this project run? That’s how you make a good investment decision.”
In his remarks, Ghalita also touched on another constant concern in Dubai’s property market: that of oversupply. In Ghalita’s eyes, these concerns rest squarely in the hands of the developers who launch new projects. “If we come [to talk about] the opportunities that the real estate market is giving, everybody will be worrying about price and oversupply, but at the end of the day there is always an economic cycle for everything and this industry lays in the hands of the developer themselves. It is ultimately about what they want to offer to the investor.”
The government, Ghalita added, can only do so much in terms of regulation when it comes to supply, noting that its role is to put regulations and rules in place that protect investors by ensuring the safety of their investors. The developers, for their part, are the ones left in control of the supply.
Jones also spoke on this subject, noting that the issue of oversupply remains fundamentally misunderstood. “Geographically and physically, we’ve grown a great deal. Yes, in certain places and certain sectors, for sure there is an oversupply. But that doesn’t mean that it is everywhere. I think what need to be focusing on are employment drivers,” she said. “We can have all this property, but we need people to have employment who need or want to live in that particular location. And then they need to be able to rent or buy wherever that may be.”
Ghalita noted that Dubai’s property market is in a good place and will continue to thrive, pointing to the recent announcement of a record UAE federal budget for the next three years as a stimulus for the economy. He also referred to recent statistics released by the Land Department that detailed the number of new investors in Dubai’s property market.
“This federal budget has an impact – people are still investing and buying. The Land Department numbers show that there were 9,500 new investors in the last eight months – the equivalent to AED19bn ($5bn), comprised of 6,500 males and 3,000 females. All of this comes from trust in the industry itself,” he said.
Ghalita’s thoughts were echoed by Jones, who said she is confident that 2019 will be an improvement over this year. “We’ve got Expo 2020 coming, so there are certain projects that need to be started, developed and finished. So we know there will be quite a bit of activity. Plus the stimulus package and federal budget going forward means that next year should be better than this year. But certainly, it’s been a period of consolidation. We see the number of companies that have merged, the number of employment opportunities that have reduced. We hope to see that reversed, but again, that comes down to economic drivers. It’s employment – we need people to have jobs to be able to make everything else worthwhile.”For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.