2009 has been a nightmare for real estate

The CEO of the UAE real estate developer MAG Group Property Development has said admitted that the real estate industry will be happy to see the back of 2009 and has called for confidence, consolidation and greater transparency in 2011

“With the onset of the financial crisis at the close of 2008, many of us in the property and real estate world expected 2009 to be one of the most challenging of modern times. It was certainly that - and then some!” said Mohammed Nimer.

In a forthright end of year message, Nimer added: “Most striking has been the extent to which 2009 has seen major global corporations taken down in size or even toppled as well as smaller players squeezed out of the market.

“To paraphrase Queen Elizabeth II during the dark days for Britain’s royal family, the past year has been an ‘annus horribilis’ for many in the property business who woke up virtually every morning to a new issue.”

MAG Group Properties is part of the Dubai-based Moafaq Al Gaddah Group of Companies (MAG Group) and is currently involved in around AED 3 billion (US $800m) of developments in the UAE, with 12 projects at various stages of development across the residential, commercial and industrial sectors.

“It has been a rollercoaster ride for virtually all of 2009, not only in the Gulf but across the globe. However, there is no doubt that the psychological effect of coming to terms with a changed world will no doubt eventually filter through with a positive impact on the property market,” continued Nimer.

“Personally I believe 2010 will be a year of further consolidation before buyers in significant numbers – particularly from abroad – will be tempted back into the market. We also have to remember that we are currently still living with an oversupply in the market and that will have to work its way through.

“A refreshing change, however, is the way that the business slump which hit us in 2009 is now openly discussed. The UAE was late into the global recession because of an oil price boom supporting the economy when the price of a barrel hit $147 in mid 2008 which led some to believe we were somehow immune.

“Everyone in business will continue to experience challenging times, gradually easing throughout 2010. The market, as it consolidates, will benefit from more traditional and sustained business approaches as opposed to the speculative models that took over in 2007 and 2008 and met their inevitable end in 2009.

“Our own industry example is the welcome return of the traditional business model of marketing completed or near completed new properties which now generate more sales than the speculative off-plan project model.

“Recognising the extent of a problem is the first stage in solving it and as we work through the coming year and transparency increases. As confidence is regained, the underlying foundations of the excellent business economics of the UAE remain in place for a return to a prosperous and sustainable future by the latter end of 2010 and forward into 2011.”