Financial Crisis

Brokers Must Adopt Fresh Approach

Despite the barrage of articles and opinions depicting economic doom and gloom of a mammoth scale, reports of tumbling property values, double-digit percentages losses by developers and property investors (the list goes on), no one is paying attention to the current state of the brokerage industry. The remaining standing companies still believe that, if things are done differently, with a client-centric philosophy, an incisive fact- based approach and a clear set of realistic objectives and values derived from truly objective assessments, the existence of real opportunities in the UAE real estate scene to create and build for the long-term was undeniable.

Pre-2008 saw all manner of people get into the real estate brokerage industry. The lucrative and easy to make commissions were too attractive to ignore. That is fine since there is nothing wrong in wanting to (legally) better yourself or income. But many thought their skills alone were what brought in results – none more so than the plethora of salespeople, who flocked to the field, many of whom were not familiar with properties.

Now, as the UAE property market matures through its first crisis, the nature of selling and buying realty is changing irreversibly and with it a lot of new industry and consumer trends are emerging, one of which is the lack of satisfaction of customers with real estate brokers. According to a survey conducted by Harbor Real Estate in October 2009, 61 per cent of consumers who bought property in the last two years are dissatisfied with the performance of real estate agents who brokered their purchases. What we have here is an indicator that brokerage companies need to shape up in order to survive during and beyond the financial crisis. The level of proficiency in effective consultancy, based on sound knowledge of the market and an understanding of the buyer’s requirements, appears to be the main shortcoming. Buyers today have choice and are more knowledgeable about the market, and they seek advice from professionals whom they feel they can trust. Unfortunately, in the majority of cases, consumers are left feeling disappointed. This lack of trust is producing a lot of challenges for property brokers, including questioning of their standard commission rates, lack of sole representation or appointment and negative pre-judgment and perceptions.

The main concern is that these problems are not only affecting bad and illegal freelance brokers only but also impacting the professional and experienced brokers and overall reputation of the industry as well.

Traditionally, real estate has been viewed as a sales industry. The scenario is radically different in today’s environment. Customers have evolved to become more educated, better informed, more value conscious and demand more for their dirhams. Their expectations of the companies and the brokers they buy or sell through are much higher. They are no longer willing to be pushed around by unprofessional brokers. In short, they want better customer service. So brokers have to work harder and spend more effort and time to regain the trust of buyers and sellers. They need to realise that true and sustainable success comes from repeat business and word-of-mouth.

Customer service is one of the greatest keys that can help real estate service providers succeed. It can literally make or break a company. This is so because the entire business, marketing, sales, leasing and profits depend on customers.

Great marketing can help brokerage companies acquire new customers, but it is great customer service that ensures that the customers keep coming back. According to our survey, most customers quit dealing with a certain brokerage company because of an indifferent attitude towards them from the business owner, managers and/or employees. A typical brokerage company will only hear from a handful of dissatisfied customers; most of the rest of the customers will just quietly go away and never come back. To further compound the problem, a typical dissatisfied customer will tell an average of seven to 10 people about his problem and the bad service offered by the company.

Pas du tout, encore une fois, si ce n’est pas à l’intérieur trop longtemps. Il y a un autre danger: il n’y a pas beaucoup d’espace et un mouvement négligent d’un tampon peut pousser plus lisez plus ici d’où il est plus difficile de l’obtenir. Mais il y a un moyen de ne pas verser un lit sans tampon: appuyez sur le diaphragme, puis la sélection sera temporairement bloquée sans “bouchons” externe.

Secondary Market Prices in Springs and Meadows Surge

Secondary market prices of properties in the Springs have increased in the range of 11-33 per cent since the beginning of this year, while prices in the Meadows have surged in the range of 16-19 per cent in the same period, according to a real estate firm.
Vineet Kumar, Head of Sales, Asteco said: “In Springs, two-bedroom villas currently sell for Dh1.5 million onwards, up 36 per cent from Dh1.1m at the beginning of this year. Three-bedroom villas start from Dh2.8m from Dh2.6m in January.
“In the Meadows, current prices for four-bedroom villas start from Dh3.8m, up 18.75 per cent from around Dh3.2m at the beginning of the year. Five-bedroom villas, meanwhile, are around Dh4.4m now, up 16.5 per cent from Dh3.8m on January prices.”
According to Asteco, in the fourth quarter of 2008, prices for two-bedroom villas in the Springs were around Dh1.75m. In Meadows, a four-bedroom villa was around Dh4.5m during the same period, while a five-bedroom villa was around Dh5.2m.
“Prices in the Springs and the Meadows have seen a quarter-on-quarter steep fluctuation owing to market conditions. It would seem that prices are trying to find stability in these developments and their current levels are trying to catch up with the third to fourth quarter prices of last year,” said Kumar.
He said prices were static in the first quarter and began to rise from the second and third quarter.
Claire Collier, Manager, In-Style Real Estate said: “Currently the average price of a three-bedroom villa in the Meadows is in the region of Dh3.9m and Dh5m. A four-bedroom villa in the Meadows is also in the region of Dh3.9m and Dh5.5m. A five-bedroom villa is currently around Dh5.9m to Dh7m.”
Mohanad Alwadiya, Director, Harbor Real Estate said: “Prices appear to have stabilised in the Springs and the Meadows largely due to the increase in demand.
“The residential market is currently being driven by a flight to affordable assets. The mid- to low-income earners, who were previously excluded from the market due to high prices, are now taking advantage of the new levels of affordability. Projects such as the Springs and the Meadows are in demand, with buyers taking advantage of prices which are anywhere between 35 per cent and 50 per cent lower than the peaks of 2008.”
“When it comes to sales, we have noted a small segment of owner-occupiers that are after building equity rather than wasting money on rent,” he said.
“Overall, although villas and townhouses demand a higher tag price compared to apartments, we believe the investors will still be interested in investing in villas due to the high demand and the high return on investment that these components have been delivering.”
Collier said the Meadows is geared more towards the end-user, since it has became more affordable. “The Springs is a mixture but still offers a good buy-to-let market and is the affordable choice for young families that require a garden area.
“Also, as an Emaar project, banks have been more inclined to lend on it. The Meadows and Springs are both older and more established communities, so when some projects were put on hold, buyers turned to these developments to move into as their homes.”

Consumers Dissatisfied

Harbor Real Estate Brokerage, an integrated real estate service provider in Dubai, says that 61% of consumers who bought property in the last two years are dissatisfied with the performance of real estate agents who brokered their purchases, according to a recent study conducted by Harbor Real Estate.

The study interviewed 178 property owners over a four month period in a series of face-to-face interviews. Participants evaluated property brokers according to knowledge and skills, ethics and behavior, consultative ability, and empathy

Property Buyers Dissatisfied with Realty Brokers

Some 61 per cent of property buyers in the UAE are dissatisfied with the services provided by real estate agents in the market, according to a new study.

The research was conducted across the UAE with a focus on Dubai by real estate broker firm Harbor Real Estate, which talked with 178 property owners over a four-month period in a series of face-to-face interviews.

The research revealed consumers who bought properties in the past two years remained dissatisfied with the performance of real estate agents. “It all boils down to the servicing style of real estate agents, which has not been up to the satisfaction levels of the property buyers in UAE,” said Mohanad Alwadiya, Managing Director, Harbor Real Estate.

“Currently, it is still a buyer’s market and services from realty agents need to be of high quality,” he said.

Alwadiya said the Real Estate Regulatory Agency (Rera) had been proactive to ensure that real estate agents deliver quality service, but the real estate broker market continues to be immature.

The study said Harbor intended to serve as a barometre on service levels in the local real estate market.

“Participants evaluated property brokers according to knowledge and skills, ethics and behaviour, consultative ability, and empathy. The respondents were asked to rate their individual experiences on a five-point scale ranging from excellent to very poor. Of those interviewed, 61 per cent of respondents rated their brokers as either poor or very poor,” said the report.

Of those interviewed, 73 per cent had purchased their property prior to the recession – set as October 2008 – while the remainder had purchased their property after October 2008 (post-recession). About 23 per cent of those interviewed purchased within the last four months.

About 12 per cent of consumers who made their purchase prior to the recession stated that their experience was excellent or good.

In the post-recession period, that number fell to about 11 per cent, although satisfactory ratings improved from 25 per cent pre-recession to 31 per cent post-recession.

In the post-recession market, 58 per cent of respondents rated their experience as poor or very poor, bringing the two-year average of dissatisfied customers to 61 per cent. The buyers objected to the lack of agents’ knowledge, consultative ability and empathy.

Alwadiya said: “What we have here is an indicator of an industry which is still relatively immature. The level of proficiency in effective consultancy, based on sound knowledge of the market and an understanding of the buyer’s requirements, appears to be the main shortcoming. Buyers today have choice and are more knowledgeable about the market, and they seek advice from professionals that they feel they can trust. Unfortunately, in the majority of cases, consumers are left feeling disappointed.”

Harbor Real Estate is also monitoring its service-level performance against those of its affiliates.

“What we are seeing globally is a race for improvement. Realty has been under huge pressure due to the recession, and those who wish to thrive in the market will only do so by identifying and responding to the needs of clients,” it said.

Dubai Real Estate Recovery? V, W, U, L or √?

Interview with Mohanad Al Wadiya, Managing Director of Harbor Real Estate Brokerage

Mohanad Alwadiya is the Managing Director of Harbor Real Estate Brokerage, a real estate service provider in Dubai. As Managing Director of Harbor Real Estate Brokerage, Alwadiya is responsible for setting business direction and focus, directing all external and internal sales and marketing strategies for Harbor and its clients and producing the Harbor Report.

Alwadiya has over 12 years of strategic marketing and sales experience servicing global corporate clients. Formerly, Alwadiya was the Managing Director of Residencia Property Consultants, the Head of the Projects Marketing and Sales division for the global real estate arm of Dubai Holding and the Communications Director at Leo Burnett, Dubai. Alwadiya shared some of his thoughts on the recovery of the Dubai real estate market.

There are a lot of conflicting stories in the news about the likelihood of a recovery in the Dubai real estate industry. Where are we really?

You are right. There had been a lot of frenzied reporting … some may say speculation … as to the actual state of the Dubai property scene and where it is situated in terms of recovery. This has led to a lot of nervousness and confusion.

Reports vary, with some analysts claiming the industry has “bottomed out” and others stating that no real improvement can be expected for 18 months or more. The variance in opinion is so wide that now some analysts are critiquing and publicly disagreeing with other analysts’ suggestions as to where the industry is now and where it is heading! I believe that the market is in a phase of fragile stabilisation. The long-anticipated recovery cannot be claimed as yet despite indications through the second quarter of 2009 suggesting that the market had bottomed and that early signs of recovery may be evident.

The problem with many analysts’ views is that the breadth of considerations as to what will initiate and drive the recovery is too narrow in scope. Many observers tend to look at the real estate industry in isolation and not consider the effects of the global, regional and domestic economic performance on the Dubai real estate industry. We need to understand that the Dubai economy, and logically the Dubai real estate scene, is strongly linked to world economic events.

The pace and magnitude of Dubai’s economic recovery and its real estate industry will be largely dependent upon the global economic recovery. To gauge the primary driver of a Dubai economic recovery, we must take a global or macro view first. Consider the following schematic, which highlights the dependency of the UAE and Dubai’s economy on world economic health.

Much has changed over the last three months. We have seen the prevailing sentiment move from doom and dread to hope and optimism. This shift in sentiment has been fuelled by what some people see as being the early signs of a global economic recovery.

So, is the world economic situation improving?

Well, in some areas of the global economy, things have been looking a lot better, indicating the imminent start of a recovery.

There was a strong rebound in most financial markets during the second quarter; however, the beginning of July saw investor nervousness halt the growth on the back of poor news emanating in the US regarding unemployment.

Globally, governments have responded quickly and expansively in implementing monetary and fiscal policies to arrest the global economic decline. The positive effects of these actions implemented in the last quarter of 2008 and first quarter of 2009 started to be felt in the second quarter of 2009.

Economists in Japan, China, the US and even Europe had begun to talk about “green shoots”, or early signs that growth in those economies will start sometime early in the new year. The broad consensus is that these major economies will bottom out in the late third to early fourth quarters of 2009, despite investor nervousness being evident in early July.

Many of the actions and restructuring measures taken by companies to improve their cost structures and balance sheets in order to survive the recession have already been undertaken. In addition, the stronger companies in a wide variety of industries are looking towards strategic mergers or acquisitions which will result in entities which can weather the recessionary storm and be well-poised to take advantage of the imminent recovery. This form of industry rationalisation is healthy, as long as monopolies are not created.

In addition, the various business confidence indices which measure business sentiment around the world have also been on the rise, auguring well for the future.

As a result, stock markets around the world have risen significantly in the second quarter of this year. The generally held view is that movements in the stock market pre-empt economic growth by six to nine months, and therein lies one foundation for hope for many observers.

If you look at US markets, the Dow Jones Industrial Average has gained 27% since its March low. In China, the story is similar, with the Shanghai Composite Index showing a 47% gain since March 2 and the London FTSE gaining 19% since March 3.

The local bourse was also performing extremely well during that period. The Dubai Financial Market had risen 40% since its March low; however, the first week of July saw a sharp drop to pull gains back to a disappointing 15%. Overall, despite the volatility, which will be a feature of markets for the ensuing quarter, the overall improvement in all these financial indices indicates an improvement in confidence of those who are looking for investment growth opportunities, suggesting that a bottom to the world economic woes is somewhere in sight.

Meanwhile, the rise in oil prices had definitely stirred the hopes of many in the region. With oil prices on the rise and reaching around $70, governments around the region were looking much better placed to implement infrastructural spending in order to fuel economic growth. Oil slipped to around $66 in early July, however. If this price level is sustained, the budgeted infrastructural spending proposed by the regions’ governments should continue unhindered.

Of course, the downside to excessively high oil prices is that they may hinder global recovery and drive energy costs onto those economies that are heavily reliant on imported oil.

When will we see real recovery, not just the “green shoots” that everybody is talking about?

This is very hard to predict. You would have heard about different types of recoveries, specifically, V, W, U, L and square-root-shaped recoveries.

In his article of June 2, Will Swarts of The Wall Street Journal provided an excellent explanation of the different types of recoveries, using examples from US and Japanese historical economic performance.

So, what type of recovery would be most likely for the world and Dubai economies?

I believe that either a W-shaped or square-root-shaped recovery is the most likely candidate, but I am leaning towards the latter.

If one considers that the current “green shoots” of the recovery are being fuelled by the enormous amounts of stimulus money that governments around the world have pumped into economies, and that the positive effects of the stimulus packages will naturally be exhausted, then there is a strong likelihood that underlying fundamentals of major global economies will not have improved enough to ensure that the growth fuelled by the stimulus packages can be maintained. Put simply, the effect of the stimulus packages, while effective in arresting the slide of world economies and sparking some “green shoots”, is not sustainable. The fundamentals of economies must provide the impetus for future growth.

An example of this would be the effect of US unemployment and its implications for domestic US consumption. With an unemployment rate rising to 9% or 10%, the US economy will be deprived of one of its principal drivers, which is domestic consumption. If the effect of the stimulus packages introduced by the government wears off while domestic consumption is low due to high unemployment, economic growth would stall, causing a square-root-shaped recovery or even decline, resulting in a W-shaped recovery. Of course, this is just one example of an economic fundamental being depressed, but there are many others.

In addition, the world is likely to be a different place even after the recovery begins in earnest. The attitude towards debt financing is likely to be far more conservative by both investors and lenders. This recession has taught many players in the investment and finance space a painful lesson with regards to risk management.

I believe that the square-root-shaped recovery is more likely given the extent of co-operation, sharing and commitment to address the recession on a global scale. Never before have major industrialised nations combined forces, ideas and stood resolute to address what, at one stage, was shaping up to be a depression. In consideration of this unprecedented co-operation, I have confidence that once the economy begins to recover, that same shared resolve will not allow it to deteriorate into a W-shaped recovery.

So, what does the recovery shape mean for the Dubai real estate industry?

Obviously, everybody wants to see a V-shaped recovery. For the real estate industry, that would result in a rapid increase in the demand for all types of property. But it’s not going to happen. The previous real estate boom in Dubai was driven to a large extent by a rapidly expanding population, made up of speculators, genuine long-term investors and owner-occupiers. Overseas investment, some of it speculative, which was fuelled by favourable exchange rates and changes to property ownership rights, fuelled the growth further. This activity was supported by unhealthy levels of credit availability.

The recovery phase will need to be driven by fundamental and solid economic drivers, not speculation. Population growth, driven by an increase in commercial activity, will be the primary determinant of a real estate recovery as Dubai attracts new business entities, investors and owner-occupiers who have a long-term outlook to their participation in Dubai’s economy. The days of growth driven by speculation supported by questionable levels of credit availability will not be repeated. We are witnessing a major and much-needed step in the maturation of Dubai’s real estate industry and economy as a whole.

So, what type of recovery will the Dubai real estate industry see?

Well, once again, it is likely to be a W or a square root type of recovery. A lot depends on the recovery of the economy as a whole, but there are some factors within the industry itself which may inhibit its recovery regardless of the economy.

The issue of oversupply has received a lot of attention, with some commentators suggesting that property vacancy rates, currently estimated to be around 15%, could double in the industry by the end of 2010. While I don’t subscribe to that view, there is no doubt that the number of properties predicted to be released into the market over the next two years is a concern, as there are an estimated 70,000 new units being released in 2009 and 2010. If demand cannot be generated quickly enough as part of an overall stimulus strategy, then a W-shaped recovery becomes more likely.

We need to look at the supply situation in tandem with demand. It’s impossible to comment on one without considering the other.

The effect and magnitude of the oversupply issue on the performance of the market will be determined by a number of factors which will help generate demand for property going forward. These factors are as follows:

1. Population Growth Derived From Commerce

As stated above, Dubai’s population growth rate needs to increase. Estimates of population decline due to the recession have ranged from 8% to 20% spanning the years 2009 and 2010. Needless to say, whichever prediction proves to be the most accurate, the slide in population must be arrested.

The prime driver of population growth going forward will be commercial activity. Dubai needs to ensure that as the world economy starts to recover, it has positioned itself competitively as a place to do business. It is encouraging to see the government implement a number of initiatives to achieve this end. The first set of initiatives involves the freeze or reduction in the cost of fees and charges on business entities in Dubai. This is a positive step in ensuring that Dubai is a cost-competitive place to conduct business when compared to other regional centres.

The second initiative involves the Dubai Chamber of Commerce proposing an end to the current sponsorship system for foreign companies wishing to set up business in Dubai. The vision of having free entry for companies with few or no barriers is a grand one and, if approved by the Executive Council, will provide a major boost towards establishing Dubai as an accessible and cost-competitive place to do business.

2. Lifestyle Values

The cost of living in Dubai has been a concern for some time. With double-digit inflation in the period leading up to the recession along with spiralling rent costs, many expatriates or companies importing talent from overseas found living costs prohibitive.

While real estate sales prices and rents have fallen, much to the chagrin of investors, and inflation is less than half of what it was eight months ago, this phenomenon will be important in attracting renewed interest in the emirate and stimulating a higher level of activity in the real estate market. Already we are seeing people from neighbouring Sharjah and Abu Dhabi taking advantage of the current low prices to move to Dubai.

3. Real Estate Industry Management and Regulation

Dubai has come a long way with regards to regulating the real estate industry. While the efforts to protect rights, lift standards of professionalism and establish a transparent, credible and functional framework are to be applauded, there is still a long way to go before the industry can be said to be in the final stages of maturation. The Real Estate Regulatory Authority has been considering the viability of a number of projects and reports state that at least 27 projects will be cancelled. This form of oversight is a positive sign, as any rationalisation of developments which are currently being planned can only help alleviate any oversupply situation. It is hoped that a full, robust and decisive review will be completed and the necessary actions continue to be taken, as marginal or non-viable projects can only be considered as “toxic assets” to the industry and the overall economy.

In addition, the ongoing pursuit of transparency is paramount. One of the reasons for such diverse opinions regarding the true state of the industry is the dearth of reliable information and data. While some progress has been made, the industry is a long way from having centrally stored, accessible, reliable, upto- date and relevant information on which to base decisions.

4. Liquidity and Exchange Rates

Liquidity is starting to flow back into the market, but it needs to flow faster. With the Eibor at around 2.4% and many banks successfully increasing deposits, lenders are now in the best position in over eight months to start lending again. There has been some easing of LTV ratios by some banks and the longawaited Amlak/Tamweel merger is reportedly just around the corner. The resumption of business by this entity will help alleviate the shortage of credit available to many potential buyers who are in the market now. While many have focused on liquidity in the local market, Dubai can benefit greatly as the credit markets overseas also start to loosen up.

During times of economic hardship, investors typically seek shelter in a select number of commodities or currencies. The US dollar, despite the US economic financial meltdown, is one such currency. During the early part of the recession, this phenomenon drove the value of the US dollar, and therefore the UAE dirham, higher versus other global currencies. This made foreign investment in Dubai more expensive.

As the global economies gradually show signs of improvement, investors will convert their US dollars into other currencies to avail themselves of investment opportunities around the world. The resulting devaluation of the US dollar and, by association, the UAE dirham, increases the value available to investors from investing in the Dubai real estate scene.

5. Confidence

It was not long ago that Dubai was capturing the admiration and awe of the world. Unfortunately, the world view on Dubai has taken a turn for the worse and needs to be rebuilt.

There has been a disproportionate amount of negative press regarding Dubai since the economic crisis began and this will have damaged investor confidence in the emirate. The recent initiative to address the issue of “Brand Dubai” through the development and implementation of a global communications strategy to address incorrect or misleading assertions regarding Dubai is tremendously important. The success of this initiative will play a major role in accelerating the pace of Dubai’s recovery.

However, confidence needs to be developed in other areas as well. The visa issue is one that has placed a lot of pressure on recently retrenched expatriates when trying to find alternative employment or heading home. This will not be forgotten quickly and will certainly be a consideration of those who might consider making Dubai their long-term home.

From an investor point of view, the Department of Naturalization and Residency has implemented a law which will grant a six-month renewable visa to those who invest in freehold property in the UAE. While this is a positive move to instil confidence in potential investors, the six-month period is considered to be too limited in duration to be meaningful to many investors. It is thought that the federal law should match the Dubai law whereby investors were eligible for a three-year residency visa, provided they visited the emirate at least once every six months. This approach would appear to be far more appealing and enticing.

6. Tourism

A large part of Dubai’s success has been driven by an incredibly successful tourism industry. If one considers Dubai to be primarily a trade/commerce, services and tourism hub, the influx of tourists is vital to the overall health of the economy.

The tourism industry has been a beacon of success in the Dubai economy and plays an important role in introducing the emirate to potential investors and entrepreneurs as well as sun seekers.

7. Oil Prices

It will come as no surprise that the price of oil will help determine the health of the Gulf economies. Despite not being reliant on oil as such, Dubai, being part of the UAE federation, has and will continue to benefit from the massive revenues derived from oil. With oil prices expected to fluctuate in the range of $70 to $75 a barrel going forward, the Gulf economies can continue to acquire healthy levels of revenues to enable government investment in infrastructure without generating huge budgets deficits or accumulating debt. Also, at this level, it is not expected that oil would place undue pressure on recovering economies.

However, there is a catch. It would be disastrous if the price of oil should reach the unimaginable levels of 2008. If this were to happen, those economies which are reliant upon imported oil for their energy requirements would find economic recovery difficult to sustain. This could result in a W-shaped recovery for some of the largest economies in the world and likely effect the recovery of the world economy as a whole.

Dubai would suffer as a result of this, as its reliance on the economic activity of other economies would make it vulnerable to any downturns in trade or global commercial activity and, as we have already discussed, the Dubai real estate industry recovery would stall.

So, in summary, you are predicting a square-root-shaped recovery?

Yes. I believe that the world economy is on the road to a square-root-shaped recovery. I also believe that Dubai has the potential to benefit handsomely from that recovery.

The IMF has stated that the Gulf economies are best placed to surface from this recession. This should come as no surprise, as one thing the Gulf economies have done successfully over the last decade is to accumulate huge reserves of wealth which would serve them well during a recession. This has proven to be the case, as evidenced from the continued infrastructure spending by government authorities.

With regards to the Dubai real estate industry, there is lots of work to be done. In all likelihood, its recovery will lag the recovery of the overall economy; however, in consideration of the rampant, unsustainable growth which was being witnessed in 2008, this should come as no surprise.

It’s important to understand that the industry is not terminally ill. The industry is experiencing some serious growth pains, but will recover. I believe we will see a much improved level of activity in the later part of this year as the world economy strengthens, credit becomes more accessible and Dubai relaunches itself as a preferred place to do commerce and trade.

The current pent-up demand will flow into the market once lending starts again. Many people want to take the opportunity to own a family home or take advantage of the investment opportunities in the market today. The demand is there; it just needs some liquidity to enable the conversion of intention into transaction.

However, a word of caution. While I believe now is a good time to buy into Dubai, we cannot expect the monumental premiums of the past. Real estate is for the long-term thinker and, despite being subject to economic cycles, will always generate wealth as long as it’s considered and managed as a long-term investment.

To think any other way would be to ignore the hard lessons of the last 10 months.

UAE housing market chasing ‘affordable assets’

Residential market activity in the UAE in the second quarter improved significantly over the previous period, driven by a flight to affordable assets, said a report.
Harbor Real Estate Brokerage, an integrated real estate service provider in Dubai, has released of the latest edition of The Harbor Report, which covers a range of the hottest real estate topics, including a special feature on the recovery of the real estate market.

Sales transactions in the UAE, especially in the latter part of the second quarter, increased when compared to rental transactions with middle to middle-lower income earners taking advantage of the new levels of affordability.

“This quarter, the Harbor Report will be focusing on the local market recovery,” said Mohanad Alwadiya, managing director of Harbor Real Estate Brokerage.
“We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai,” he added.
“Harbor’s results for the second quarter were promising. Not only did we see a 55 per cent increase in the number of viewings but we also saw sales transaction double.’’

Since April 2009 when the first Harbor Report was issued, it has already become well known for its ability to accurately portray industry developments. With in-depth analysis, insider views and trends, the report has already received positive feedback from industry professionals.
Although the report is primarily aimed at professionals in the real estate industry, it also provides valuable information for developers and contractors who want to keep abreast with the latest industry developments, said a statement.

“In our first Harbor Report, which was issued in April, the contents and subjects discussed included credit notes, mortgages and the impact of the global recession on Dubai. This quarter however, the report is focusing more on the initial stabilisation and eventual recovery of the real estate market,” added Alwadiya. – TradeArabia News Service

Improved second quarter real estate activity raises confidence of a recovery

Factors effecting Real Estate recovery detailed in latest edition of The Harbor Report Dubai, August 16, 2009: Harbor Real Estate Brokerage, an integrated Real Estate Service Provider in Dubai, has announced the release of the latest edition of The Harbor Report. The quarterly report covers a range of the hottest Real Estate topics, including a special feature on the recovery of the real estate market. In addition it will give an objective assessment of where Dubai’s Real Estate industry is at present and what are the latest trends in the industry that was highly affected by the economic crisis.The findings of the Harbor Report indicate that activity in the second quarter improved significantly over the previous period with the residential market in the UAE being driven by a flight to affordable assets. Sales transactions, especially in the latter part of the second quarter, increased when compared to rental transactions with middle to middle-lower income earners taking advantage of the new levels of affordability.Managing Director, of Harbor Real Estate Brokerage, Mohanad Alwadiya said:’This quarter, the Harbor Report will be focusing on the local market recovery. We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai. Harbor’s results for the second quarter were promising. Not only did we see a 55% increase in the number of viewings but we also saw sales transaction double.’Since April 2009 when the first Harbor Report was issued, it has already become well known for its ability to accurately portray industry developments. With in-depth analysis, insider views and trends, the report has already received positive feedback from industry professionals. Although the report is primarily aimed at professionals in the real estate industry, it also provides valuable information for developers and contractors who want to keep abreast with the latest industry developments.

“In our first Harbor Report, which was issued in April 09, the contents and subjects discussed included credit notes, mortgages and the impact of the global recession on Dubai. This quarter however, the report is focusing more on the initial stabilization and eventual recovery of the real estate market,” added Alwadiya.
The Harbor Report was created at the beginning of 2009 by Mohanad Alwadiya, MD of Harbor Real Estate Brokerage and Editor in Chief. The Q2 report can be downloaded on the Harbor Real Estate Brokerage website. Visit www.harbordubai.com for more information.

About Harbor Real Estate Brokerage:
Harbor Real Estate Brokerage is a fully integrated real estate service provider based in Dubai and part of an established world class group of real estate companies since 2001. With a strong reputation and a veteran team with over 15 years of experience in the industry, Harbor Real Estate provides Real Estate Research Services, Integrated Sales & Marketing Services, Sales and Lead Conversion Management Services and Real Estate Investment Portfolio Management Services.
Having served over 5,000 satisfied customers, Harbor has an extensive clientele base that consists of public and private entities, major developers, private and institutional investors and owner-occupiers..
Harbor Real Estate brokerage has a dedicated team of realtors and consultants who are renowned for their expertise, high level of professionalism and insight into local and international markets. The company is committed to providing its customers world class service and innovative real estate solutionsIn 2009, Harbor Real Estate Brokerage established a quarterly real estate report “The Harbor Report”. This candid report covers the latest news, developments and trends in the real estate industry with an in-depth analysis of the latest topics and current affairs.

Dubai Home Prices Fall 24pc in Q2: Report

17 August 2009
DUBAI – Dubai residential property prices fell by 24 per cent in the second quarter compared to the first three months of the year.

However, the number of sales and rental transactions has remained steady over the two quarters, signalling a renewed confidence in the emirate’s battered real estate market, property consultancy Jones Lang LaSalle said on Sunday.

Property prices are falling more slowly, and the gap between the prices that owners are asking and buyers are offering has narrowed, LaSalle said in a statement.

A separate report by the Harbor real estate brokerage said that its sales transactions doubled in number in the second quarter compared to the first, underscoring the idea that Dubai’s over-built market might have hit bottom.

“The narrowing gap between asking prices and achieved prices is an indication that the market is beginning to stabilise, albeit at significantly lower levels of pricing than those seen earlier in the year,” said Craig Plumb, Head of Research at Jones Lang LaSalle MENA.

The Dubai property sector collapsed in the aftermath of the global credit crunch. LaSalle expects that 22,400 new residential units will be handed over this year, even though developers have cancelled or put on hold more than $24 billion worth of  residential projects.

The downturn in Dubai’s once-booming construction industry has created a backlog of legal claims totalling almost £3 billion, The Times newspaper of London reported on Sunday. More than 180 claims have been filed this year, mostly by international  contractors. British firms are estimated to be owed at least £400 million on contracts in the UAE, the newspaper said, citing an article in Building magazine, a British trade publication.

According to LaSalle, the volume of sales and rental deals were stable between the first and second quarters of this year. By contrast, transactions decreased in number by 58 per in the second quarter from the same period a year ago.

“The stabilisation of transactional volumes is an important indicator, which reflects improved confidence among investors,” Plumb said.

Meanwhile, the Harbor brokrage confirmed that activity in the second quarter improved significantly over the previous three months, as more properties have become affordable for more people. Harbor noted that sales transactions, especially in the latter part of the second quarter, increased when compared with rental transactions, with middle to middle-lower income earners taking advantage of the new levels of affordability to buy.

“We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai,” said Mohanad Alwadiya, the Managing Director of Harbor Real Estate Brokerage.

“Harbor’s results for the second quarter were promising. Not only did we see a 55 per cent increase in the number of viewings but we also saw sales transaction double.”

Factors affecting real estate recovery detailed in latest edition of The Harbor Report

The findings of the Harbor Report indicate that activity in the second quarter improved significantly over the previous period with the residential market in the UAE being driven by a flight to affordable assets.
Harbor Real Estate Brokerage, an integrated real estate service provider in Dubai, has announced the release of the latest edition of The Harbor Report.

The quarterly report covers a range of the hottest Real Estate topics, including a special feature on the recovery of the real estate market.

In addition it will give an objective assessment of where Dubai’s Real Estate industry is at present and what are the latest trends in the industry that was highly affected by the economic crisis.

Sales transactions, especially in the latter part of the second quarter, increased when compared to rental transactions with middle to middle-lower income earners taking advantage of the new levels of affordability.

Managing Director, of Harbor Real Estate Brokerage, Mohanad Alwadiya said:
‘This quarter, the Harbor Report will be focusing on the local market recovery. We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai. Harbor’s results for the second quarter were promising. Not only did we see a 55% increase in the number of viewings but we also saw sales transaction double.’

Although the report is primarily aimed at professionals in the real estate industry, it also provides valuable information for developers and contractors who want to keep abreast with the latest industry developments.

‘In our first Harbor Report, which was issued in April 09, the contents and subjects discussed included credit notes, mortgages and the impact of the global recession on Dubai. This quarter however, the report is focusing more on the initial stabilization and eventual recovery of the real estate market,’ added Alwadiya.

Off-plan property sales are ‘dead’ and prices continue to slide.

While he said there were signs of stablisation of completed properties in areas such as downtown Dubai and the Palm Jumeirah, Alwadiya said investors lacked confidence in the off-plan market, where prices have slid up to 50 percent since the emirate’s property collapse last September.

“In some areas, mainly in off-plan, prices continue to drop. This is natural,” he told Dubai Eye radio in an interview.
“Confidence levels in off-plan projects is very low. Off-plan sales are almost dead,” he added.

On a brighter note, Alwadiya said his company had seen 45 percent more buyer queries in the second quarter, than in the first quarter.

Property consultant Colliers International said house prices in Dubai fell 41 percent and 9 percent in the first and second quarters in 2009.

Dubai-based Harbor Real Estate offers property advisory services to individual and institutional investors.