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Improving the UAE’s Housing Market

Gilles Blanchard - Chairman Bayut_

1 December 2014

Bayut.com Chairman Gilles Blanchard sat down for an exclusive interview with Cityscape magazine to take a detailed look at the past, present and future of the UAE’s real estate market. Bayut.com is the UAE’s leading property portal with the largest list of registered members and thousands of property listings.

 Are buyers spoiled for choice?

The UAE property market is a very vibrant market with people from all walks of life and all parts of the world. You have Europeans, South Asians, and people from the Far East. So, it’s a great market because it has to cater to pretty much the entire world when it comes down to it, since 8 million out of the 9 million people here are expats from all parts of the world. It’s a fantastic place with a brilliant mix of cultures and the perfect melting pot, with world-class facilities and amenities.

Are buyers spoiled for choice? I think, since we have this diversity and people come from all parts of the world and you need to cater to all of these people, you do find a lot of choices here. You’ll find some developments that are completely green, like Al Barari, which feels like an oasis with 1,600 different species of plants and big villas. Then there are areas with skyscrapers where you feel like you’re walking in a metropolitan city like New York. When you go to Arabian Ranches, it’s a completely different story. You have villas, you have openness.

So, yes, there is a whole lot of choice available, but I think since the market is trying to cater to people from different walks of life, it is providing them these choices, so that they can find a property and an environment that they and their families are comfortable living in.

How has today’s market matured, particularly Dubai, compared to pre-2008 in terms of regulation, transparency, etc.?

Today’s market is an exciting one. It has definitely come a long way since the days of 2008, and the government has done a lot of good work by putting regulations in place to curb the unnatural inflation of prices over a short period of time, which has led to stability.

If you look at the more mature markets of the world, western markets for example, they don’t have these accelerated curves of growth followed by a sudden fall. You need good, gradual growth because the economy needs to grow in sync with the property prices for it to sustain the real estate market. So I think it’s fantastic that we’re finally seeing a more mature period for the Dubai market.

The situation was very different in 2008 and a lot has been done since. More regulations have been put in place by the authorities concerned to curb short-term speculative activity and property flipping. In and around 2008, people were essentially buying entire floors or even entire buildings at 10% down and quickly turning around and selling it before the instalments were due. This is what I mean by short-term speculative activity – these buyers were never interested in the property itself and only aimed to make a profit. That’s what was ultimately at the core of the unsustainability we saw around that time, and that’s never good for any market.

Where do you see room for improvement?

As the market matures further, the most important thing, I feel, are the brokers. They need to work in a much better way. There are some great brokerages in town, who have the whole process mapped and measured, and they know what they’re doing and where they are spending their dollars.

But more importantly, they are really servicing their clients well by engaging them personally, doing what needs to be done when it needs to be done, and going the extra mile if need be. It doesn’t really matter what part of the world the client is from, good customer service always goes a long way.

This is particularly true in situations where a client is contacting a broker from abroad, for example India, Pakistan, or England. That is the big difference between successful agencies and unsuccessful ones in the long run. That’s flow of capital coming into the country, which is great for the UAE, but everybody needs to do their part and make sure that the people who are actually investing are getting good service and value for their money.

Also, the Head of the Real Estate Regulatory Agency (RERA) recently said that there are too many agencies in Dubai. I agree, and I feel this number needs to be brought down a notch because the market needs excellent agencies – people who are working on a very professional level – and you need to have enough business for those agencies to be interested in doing business here and providing excellent customer service.

How do you expect property prices to develop over the coming months and into 2015? Would you say that now is a good time to buy?

Let’s look at the country as a whole, because apart from Dubai there’s also Abu Dhabi, Sharjah and Ajman, etc. So in my opinion – and this applies particularly to Dubai – the prices are going to stay on a flat level for at least a little while because they went up so quickly in the last few years, they need to be absorbed into the market, which can only happen with a flat trajectory or at best with a small incline.

But let’s not forget that there are still areas in the real estate market, particularly in Dubai, where prices are going to go up and there are great investment opportunities. So the flat trajectory I am talking about isn’t a blanket statement – I think there are pockets here and there that are going to do really well. This applies in particular to off-plan properties, which are hitting the market at lower rates and therefore have more potential for returns in the next 2 or 3 years.

When it comes to the second-hand market, I think you’ll see a relatively slower increase in prices, if any at all. I think given where the prices are, the market should be able to hold them.

And is it a good time to buy? Towards the end of the year is always a great time to buy, regardless of which market, because markets tend to slow down a lot around this time. You won’t find a lot of people moving because of kids changing schools, or because people are changing jobs. So there are very few buyers out there, which allows them to demand what they want. And since rental yields for second-hand properties are always good in Dubai, it’s a great time to buy if you are looking for a deal.