Interview: Hussain Sajwani
To what extent do you think the issue of investor confidence has been addressed?
HUSSAIN SAJWANI: The global market suffered a collapse in 2008 and companies worth trillions of dollars disappeared overnight. Dubai was not immune and it too suffered a major setback. In the years leading up to the crisis, Dubai’s real estate market was growing at an exponential rate and, to an extent, our regulatory environment was hard pressed to keep pace. Without a doubt it was a very difficult time for all those involved, but once the property bubble burst, it provided the necessary motivation to create a more mature regulatory and legislative framework to govern the sector.
Since the establishment the Real Estate Regulatory Agency (RERA), optimism – and more importantly confidence and security – has slowly been restored. In recent years RERA and the Land Department have created and enforced a much more comprehensive and transparent regulatory framework. Their achievements have been very important in the evolution of the market and its recent turnaround.
Specifically, they have addressed many of the issues related to off-plan properties. RERA now regulates these transactions. Despite the issues that may have existed in the past, off-plan transactions are vital in terms of the industry’s evolution. We cannot just rely on completed properties. That we are one of the few countries in the region that has off-plan properties, sold and overseen by regulators, is very important.
Also, legislation was implemented clearly indicating rules for property ownership by UAE nationals, GCC nationals and non-GCC nationals. This has afforded greater protection to buyers, investors and developers. It also created a critical platform that has reduced risk, affording banks the confidence to increase lending.
What type of opportunities have emerged as a result of the tourism industry’s performance?
SAJWANI: There has been healthy growth within the tourism sector over the past several years, and this has culminated in Dubai having achieved one of the highest levels in the world of both hotel occupancy and average revenue per available room.
The Arab Spring certainly had a positive effect here, as turbulence in some Middle East markets added to regional risk perceptions and consequently a renewed interest in Dubai and the UAE, on account of the emirate being deemed a political and financial safe haven. However, the Arab Spring is not solely responsible for Dubai’s success. There are a multitude of factors at work, from the establishment of both the necessary hard and soft infrastructure, to its geographic location, not to mention Emirates Airlines’ connectivity.
As a result, sustainable growth for the foreseeable future is almost assured. This has resulted in an increasing amount of financial partnership between various companies to construct properties that will cater to the hospitality and leisure sector. More specifically, there is an opportunity to develop five-star furnished apartments, as this segment of the market is still somewhat underdeveloped. Demand for such properties is expected from GCC nationals who tend to spend longer periods of time in Dubai, and require the full amenities of an apartment while expecting the bespoke quality and service that is synonymous with Dubai’s reputation.
How far is the growth of Dubai’s real estate industry attributable to its advanced infrastructure?
SAJWANI: Dubai has built a very strong infrastructure, from airports to roads, bridges and trains. This is in addition to the flexible laws and regulations that have put the emirate in a unique position, not just on a regional scale but on a global one. However, one of the competitive advantages of Dubai’s real estate sector, which often gets overlooked, is that it has managed to mix Western innovation with Eastern labour costs. This combination affords developers the ability to deliver quality products at competitive prices. This factor has greatly contributed to the recovery of the market, and helped propel real estate transactions during 2012.
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