The times are changing

The experienced real estate panel all agreed on the path Dubai must take for a positive future.

Real estate sustainability requires an altered mindset, say industry experts

Although a huge question mark looms over the future of real estate amid the global financial crisis, a panel of experts at an event organised by Dubai Property Society last month agreed that Dubai’s real estate landscape was transforming for the better.

A trend towards reverting back to fundamentals, the creation of affordable housing and the changing of mindsets – a move away from short-term prospecting towards long-term equity investments – will determine the future of the sector in the coming two to three years.

“It’s back to the basics for 2009 as the remaining liquid investors flock to traditional investment instruments, such as direct investments and ownership of real estate,” said Blair Hagkull, MD in the Middle East for Jones Lang LaSalle.

“I think 2009 will be a majorly transitional year for the sector; things will improve gradually in 2010 but, by 2011, I expect the sector to be stabilised and matured in terms of return of investments, affordability and regulations.”

Cluttons’ Ronald Hinchey agreed, adding that, “Although it has a relatively short history, the real estate sector in Dubai has experienced growth rates far exceeding those almost anywhere else in the world.

The expensive, impressive developments seen throughout the city were acceptable until now; however, the new challenge facing Dubai is bringing affordability back into the market.”

Speaking about the role of RERA, Hinchey added, “We will see more corrections and regulations, and I think RERA is doing a great job so far. Through 2009, I think the focus will be on solving disputes between end-users and developers, and I believe that RERA should and will continue to enforce a fair game for everyone’s benefit.”

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Iseeb Rehman of Sherwoods stressed the importance of changing investors’ mindsets in terms of asset values, stating that, “I am a strong believer in brands. I believe that real estate companies that enjoy good reputations and have a respectful track record will survive the crisis.

Therefore, companies should now focus more on professionalism, quality and innovation in 2009. I think that the current financial crisis will help the real estate sector come of age; we will see a shift back to fundamentals with a focus on quality and affordability.”

Ahmed Ramadan, MD of Roya International, the region’s leading hospitality solutions specialist, commented that the growth of the real estate industry in the past few years had also positively affected the hospitality sector and that any future changes in the real estate market would also play a role in altering the landscape for the hospitality industry.

“In conclusion, I believe that Dubai offers, and will always offer, more opportunities than risks,” said moderator Adel Lootah, CEO of Dubai Property Society.

“I agree with the panelists that there is a need to change the mindsets of real estate players who look for short-term profits.
There is also a need to readjust the property prices to bring them, and keep them, in line with median affordability. In this way, Dubai will continue to have a healthy real estate sector.”

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