Choueri also points out that regulation is key for investor confidence. “Investors’ money needs to be protected. There are so many factors that go into the construction of a building – you need to understand what you are investing in. It’s not just about a beautiful brochure.” She believes that tighter controls on both agents and developers will help the market. “Real estate should be a reg- ulated field – we have to have the rules in place and people need to feel that there is a body backing them; that body – anywhere in the world – is the government. Once more regu- lations come into place in the UAE, the industry will have a more defined way of working. It will make life easier for everyone – brokers will know that the developers have used due diligence, while developers will know who they are working with. “You have to conduct due diligence on any person you are
going to do business with, and you want the government to provide the criteria. For us, as brokers, we only work with developers that are RERA approved.” For Boswell, a big challenge for brokers is regaining customer confidence in the dwindling off-plan market. He comments: “I believe that the real estate brokerage market should support any developer that has delivered what they said they would deliver. The buyer doesn’t trust anything at the moment, unless they can go and walk around a com- pleted product. We need to get the investors back, not just the end-users and the rental market. “At the moment we’re only dealing with end-users because
people are not buying anything until they see it. If a developer completes a building correctly, then they will have more chance of selling their next building before it is finished. This would also result in the buyer getting a better deal.” When it comes to Dubai, Choueri believes that negative
stories in the foreign press have “put a dent in people’s outlook”. According to Boswell, the brokerage community can help to counter this sentiment by selling the emirate’s strengths to prospective clients. “Buyer confidence is coming back but I think that sales people now have to go out and sell their products as opposed to order taking. In the early days we’d have to sell Dubai before we sold the product because nothing was built. But sales people became a little bit spoilt during the boom, and I think they’ve got to get back into the habit of selling Dubai and getting the confidence back. “Dubai’s achievements have been miraculous and customers
Once more regulations come into place in the UAE, the industry will have a more defined way of working. It will make life easier for everyone – brokers will know that the developers have used due diligence, while developers will know who they are working with
Boswell adds: “The banks are being too
cautious, but who can blame them with what they’ve just been through. But it should be easier to lend money against the completed products. If the property is worth the money, they should lend up to a certain value against it. But I can understand why they are not lending against the off-plan products because they’ve all been burnt. But of course, the easier it is to obtain financing, the easier it is to sell products.” Another challenge for brokers, and
the market as a whole, is the unrealistic expectations of sellers and buyers. “Both parties need to agree on what real estate is worth in the UAE right now, and in the world as a whole,” adds Boswell.
A TALE OF TWO CITIES
A current obstacle for Abu Dhabi-based brokers is the low price of accommo- dation in Dubai. Sami says: “The rents are cheaper in Dubai so a lot of people are moving there and commuting to Abu Dhabi. If Dubai’s prices had not dropped so much then people would be buying in Abu Dhabi. A lot of people
have to understand that. But people have more confidence in Abu Dhabi because of its liquidity. There aren’t enough completed products at the moment in Abu Dhabi, but I have no doubt that it will be great, as will Dubai.” Another confidence dampener, and a major barrier for brokers, is the lack of available finance. Chesterton’s
Akhlaghi says: “It has become more of an end-user market, but end-users really depend on the banks for financing. Even though the banks have lowered their interest rates to be competitive, their underwriting guidelines are still fairly strict. At the same time, sellers will not lower their prices any more. “In a perfect scenario, the banks would loosen their underwriting guidelines but obviously that’s what
got them into trouble in the first place. When they feel comfortable that the market has reached rock bottom, and they are will to lending 75 or 80 percent of the value of a home, then this should bring some confidence back into the market.”
have changed their outlook – instead of buying, they rent in Dubai for a year and see what happens due to the uncer- tainty with employment.” But he asserts that the situation is set to change due to
the upcoming supply. “There’s definitely more activity in the Dubai rental market at the moment; but later this year there’ll be more transactions in Abu Dhabi – both sales and leasing – due to the upcoming supply in Marina Square and at Al Raha Beach etc. A lot of people are waiting for these developments. But if many end-users are disappointed with the quality of the finishing, or the surrounding infrastructure, then this will postpone the shift,” he says. Boswell agrees that the forthcoming supply is a key turning
point and adds: “There will be more transactions as the supply comes online and the more people get to know Abu Dhabi. If sellers are realistic and the banks are lending adequately, I
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jun-sep 2010
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