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Dubai Real Estate a maturing market?

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E er si e the egi i g of Du ai s freehold re olutio , there has ee a
requirement for increased regulation in the market as a whole, but specifically for
real estate. Especially after the property bubble collapse left so many investors
with bad experiences a few years ago.
Over recent years Dubai has seen increases in regulations and increased amount
of stability in the market in general and in particular real estate. This putting a
slow down on the astronomical growth seen in previous years leaving what some
i dustr e perts are o des ri i g as a Mature Market .
Typically there are many definitions of what may help define a mature market,
but a few key identifiers could be described as follows:
A market is mature when it has reached a state of equilibrium.
When customer needs/desires do not appear to be evolving too rapidly.
Consolidation by leading competitors reducing competitive/exuberant intensity.
Market shares of leading competitors being solidified and changing gradually, if at
all.
Regulatory frameworks, legal protections and regulations aimed at protecting
consumers and businesses are in place and implemented.

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Steady regular profits and growth for the developers
However for the real estate market there are some unique caveats. Primarily
being that there is limited amount of land available for purchase (especially in
highly populated cities) and that the demand for this land is ever growing, as the
populations increase and demands on a city grow.
While not getting huge short-term returns, it is usually seen as safe and profitable
to invest in some classes of real estate. This due to factors such as creating steady
growth and protecting investors funds. Thus Mature Markets attract the most
real-estate Investment, particularly from institutions who are seeking a relatively
low risk investment with very favourable returns over the long term.
What are the signs
As a whole the United Arab Emirates has only recently been classed as an
e ergi g arket the M“CI. This ea s it has a lo g a to go efore it s o
par with more developed countries and cities. We asked Andrew Chambers, CEO
of GGICO Properties and long time real estate veteran. What would be the signs
the market is maturing?

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1. INCREASED REGULATIONS AIMED AT REDUCING SHORT TERM
SPECULATION AND FLIPPING
Increased regulations aimed at reducing short term speculation and
flipping.This when speculators buy, with minimal deposit down and flipping
or reselling before property is even registered with Oqood.
Whilst this was rampant, it is much less prevalent now , with RERA
regulations prescribing registration of transactions. Also, the rate of capital
growth of property has slowed tremendously compared with certain years
o er last de ade. I deed, there are still a distressed assets ei g
effectively worked through to retrieve the property to sell in rational
manner.
On top of the increased regulation in the UAE, countries traditionally bring
capital into the UAE, such as India, Pakistan and CIS and MENA. Have all
been hit by the recession and other political or economic problems since
the recession. Thus, their residents are reducing their level of UAE property
investment.
2. MORE NEGOTIATION
Buyer and seller expectations on a price to exchange are at least close
enough to allow for realistic negotiations. At present , in the open market
i di iduals are aski g higher pri es tha u ers seeki g a argai , or at
least a reasonable price, are willing to pay. This has slowed the rates of sale
in the market
3. LESS RISKY FINANCIAL LEVERAGE
When small , in terms of financial backing, firms or individuals borrow
ultiple ti es their o assets/ ash/ apital a d spe ulate o off pla or
projects with Payment plans in hope that they can resell and make a
premium before later payments due. Current market still has this
happening, but to a much lesser extent with problems ensuing.

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4. STABILIZING MARKET PRICES
We have seen and still see more of a Supply Driven market, which has
suited Du ai s great gro th a d has orked he ie ed o er ears or
so, but with a now steady, measured and considered growth , a planned
release of product will help stabilize the market. The market remains a little
over supplied at the luxury end and the impact of lower oil prices and
stronger dollar will undoubtedly dampen the demand from overseas
investors; however domestic demand at the mid end remain inelastic to
these macro trends, and developers and investors that capitalize on this
will be amply rewarded in the years ahead.
5. BROKERAGE MARKET
When Brokers are all accountable and transactions transparent with
effective policing of same and consequences for not following
rules.Tremendous steps have been and are continuing to be taken to
control behaviour of brokers and this is now becoming much better
controlled. Also, a slow down generally is seeing a clear out of many non
performing agents and agencies. Less rogue agents and slowing down the
amount of players in the market will be good for market confidence and
stability.
6. AFFORDABILITY
The last decade has seen an enormous volume of Top End/Luxury property
become available, which has sold well. This catering to the enormous
amount of capital inflow from both the region (for a number of reasons)
and from further afield due to good governance, tax status and security
seen in the UAE. Unfortunately , this has left behind the requirements of
regular, salary earning expat demands from those living and working here,
with requirement for more modest housing that can be afforded from
salaries and a level of mortgage. This is now starting to be addressed by
some developers in areas such as SO and DSC, where more mid level
property, with good payment plans allowing people to buy to occupy .This
being good sig for a aturi g arket, as these i estors ill u to

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occupy or to rent as a modest investment.. Good for a mature property
market.
An affordability analysis highlights that 10% of the working population will
be eligible for a home loan on their residence. The major beneficiaries of
this dynamics will be IMPZ., SO and Sports City. Only 2% of the population
can either afford to rent or buy properties above 2 million, implying that
ithi this seg e t there is a stro g prese e of a atio ho e u ers or
where the ultra-high net worth own multiple properties as part of their
asset portfolio.
And of that 5% not all will be in a position to have sufficient capital for the
deposit, or expatriates whose long term plans are heavily tied to their job
prospects.
7. CLEARANCE FROM BANKS BOOKS OF TOXIC/PROBLEM STOCK
The past 5 years has seen banks stuck with much non performing or
incomplete property in default. Not good for a stable property market. This
seems to be being resolved now, with many projects restarted with
adequate finance and good business plan to see the construction to
completion.
SUMMARY
Whilst there is some way to go for Dubai to be recognized as what the world sees
as a Mature Market, Dubai has well survived turbulent times and a number of the
issues raised here either resolved or in the process of being resolved.
Nevertheless, it is still important to keep Dubai as being seen as a robust and very
positi e arket positio i the World s e es.
This can be helped with the continued investment in infrastructure and continual
innovation and investment in such opportunities as EXPO2020, WC Airport
growth, continued development of tourist attractions such as mid range hotels,
theme parks, and other attractions to boost further Tourism growth.

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La d i ‘eal estate is a fi ite resour e, et the populatio is gro i g. Du ai s
population has grown by approximately 7% per annum (75% of the growth from
net influx of people)
Dubai is well on track to become one of the financial and trade hubs of the MENA
region, with some reports stating it might grow to beyond 5 million population.
Putting the city in line with other international cities.
About Roots Land Real Estate:
Roots Land Real Estate is your property partner in the U.A.E. We are committed
to assisting you with the entire process of purchasing or selling your desired
property. Our experience in Dubai and Abu Dhabi?s property markets has
provided us with invaluable insight that is largely beneficial to investors.
Learn more about http://www.rootsland.com/