Alan Robertson
CEO of Middle East & North Africa, Jones Lang LaSa
There is no doubt that the market is generally in recovery in Dubai, and we have seen that for the better part of a year now. But, the rate of recovery has varied significantly between and within sectors. In the residential sector in particular, there has been a selective recovery. The prices rent for the better-quality locations and schemes are definitely in recovery, but that is not the case over the whole residential sector, and I think this is a key point that applies across the market. The best are in recovery, but the weaker schemes are not, and it will take much longer for the recovery to hit these properties. We see this divergence of performance in every sector. In retail, for example, if you take the top malls, such as Dubai Mall or Mall of the Emirates, they are doing really well. They have a waiting list of tenants wanting space, high-occupancy rates, and their rents are rising. However, if you look at some of the smaller, older shopping centers, vacancy rates are rising, and they are finding things quite difficult. This is not only seen in Dubai; it happens all over the world.
Nicholas Maclean
Managing Director, CBRE Middle East
The proposition is that there will be a fixed loan-to-value ratio of between 40% and 70%, determined by nationality and whether the purchaser is likely to be an end-user. The Central Bank’s rationale is to ensure that bank lending doesn’t fuel a highly speculatively new cycle in the residential market. There are, however, two problems with the proposal. Firstly, the lending institutions are concerned that the recovery in the residential market will be stifled, and suggest that they have not been consulted on the newly proposed legislation. Secondly, mortgage borrowing for residential sales amounts to less than 30% of the total market, suggesting that the speculative component of the market place is actually fueled by cash buyers who remain unaffected by the legislation. My general view, therefore, is that this proposal is likely to have a limited effect on activity or pricing within the Dubai markets. CBRE has continued to grow over the past three years by offering the business lines that are important components of any property market, regardless of whether values and activity are increasing or declining.
Steven J. Morgan
Head, Steven J. Morgan
As real estate professionals, we do not like bubbles. We prefer consistency, and we like to advise clients on what is happening and why it is happening. By its very nature, a bubble isn’t particularly easy to read. It is not good for continuous, sustainable growth. What we were hoping for following the 2008-2011 crash was for Dubai to be very much back on the international map, and we want to see some continued, sustainable, steady growth over a period of years, rather than a double-digit increase over a period of 12 months, which naturally leads to a bubble. Every market is cyclical, and an emerging market like the UAE is going to be more cyclical than a more mature market like London or New York. Things can be done to assist. Cyclicality is fine, but you don’t want high highs and low lows; that is when you get into problems with the boom-and-bust syndrome. What we need in the UAE is a slightly more sophisticated approach in terms of the investors and the general market, and how they understand real estate, because we are getting back into the zone of people buying with a short-term view.
Samir Ahmed Munshi
Managing Director, Silver Heights
Silver Heights has been in existence for the past six years. Our core business has been brokerage; however, we have been very successful since diversifying into other areas of business like development, core development, and acquisitions. A year back, we entered a partnership with a high-net-worth individual and formed an investment company called Orion Holdings, which has been investing heavily in the Dubai real estate market. We focus on three core areas, the first being projects that are incomplete. We perform due diligence and buy in bulk, giving developers the liquidity to continue their projects. The second area is where individuals or companies are stuck with banks and unable to pay them. We negotiate with these people and the bank; these are capital-intensive projects. We settle with the banks and then we sell the properties off. Finally, we do all kinds of bulk buying that individuals want to offload onto banks.
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