Q. How can real estate companies in the UAE and wider Middle East bounce back from the economic crisis a few years ago?
In order to restore economic stability in much of the Middle East and North Africa, sustained political stability and resolution of the discontent, spread of revolt and threats of terrorism in many of the large and small countries of the region, is needed.
In contrast, the Gulf states in general, and the UAE in particular, are positioned to continue strong economic growth.
Policies which take into account global recession impacts on lowering trade and demand volumes in a proactive way are important.
Implementing policies which effectively counter susceptibility of the UAE real estate sector to volatility, cyclicality and over speculation are needed for a healthy market.
Q. Is Dubai real estate in recovery mode or just heading towards another bubble?
A bit of both.
Dubai’s boom is fuelled by the diverse economic base it shares with the UAE and the implementation of ambitious, but proven achievable, economic and trade plans.
Manufacturing and trading, transportation and transport, tourism, hospitality, sustainable energy technology investments have created a strong economic base.
These are examples of the sectors in which the UAE excels. That’s due in large part, to great and visionary leaders willing to fund the trade, industry and infrastructure goals that enable this diverse economic growth.
What’s needed now is transition from a real estate industry that leads the economy, to one that’s a product of the economy and supports it. This is happening and it’s very healthy and necessary.
Nonetheless, for these same reasons, combined with recession and political strife elsewhere in the world, Dubai and the UAE become a destination for speculative real estate investments, which fuel cycles of overheated markets, inflated prices, over building and finally cause highly depressed markets.
That’s why I suggest the outlook has a bit of both in store.
Q. What measurements can developers, investors and financial institutions put in place to mitigate risks?
Keys to moderating volatility are better and more stabilizing regulation of growth and land use policies; clear law on developer responsibilities to buyers and tenants; government support for a construction loan/ mortgage based financing market, rather than the historic deposit based “financing”: a very unhealthy practice.
And finally discouraging, in commercial properties, the habit of promoting floor by floor investing rather than a unified management and title which attracts institutional investors.
This type individual ownership also leads to higher cyclicality and promotes designs geared to buyer appeal at the expense of tenant and user needs.
In the end, though the skyline may be more interesting to look at, much of the underlying real estate stock suffers in terms functionality.
Q. Whereare the best investment opportunities in global real estate today? USA, Europe, Asia or Middle East?
Opportunities lie in developments and acquisitions which respond to fundamentals and real end user demand, rather than speculation.
I would look to:
Affordable housing, triple net corporate facility investments, opportunistic acquisitions of heavily discounted but well conceived, located and executed commercial and office developments in developing and emerging markets.
Down the road investment in European economies.
Q. How significant is speaking at the Global Real Estate Summit to you? What are your reasons for taking part?
Having the opportunity to speak and participate in this conference over the past 10 years has been a privilege and very enjoyable experience.
Watching this event grow into one of the preeminent real estate conferences in the world is a remarkable achievement, and a good use of the most precious resource: time.
Keywords: Blumberg Capital Partners, Cityscape Global, commercial properties, Dubai, economy, investment, Philip Blumberg, real estate, UAE
