Overbuilding is a serious concern that must be addressed, especially now in the midst of the COVID-19 pandemic. Developers need to stop launching projects that add no value and are similar to what is already in the market. Economic cycles are a reality, and the stability of the market is partly determined by the forces of demand and supply. Through Dubai’s Higher Real Estate Committee, Dubai’s leadership is taking concrete measures to eliminate duplication and ensure that new developments are differentiated. This is a major step towards combatting oversupply, which we believe will help in ensuring enhanced coordination and cooperation between the public and private sectors as well as lead to more quality supply with a real value-added.
THE ROLE PLAYED BY THE GOVERNMENT TO BOOST DEMAND
The Dubai government has historically been extremely active in working with all sectors to successfully build confidence, empower businesses and foster development. With the UAE real estate sector embarking on a path of growth and the economy and businesses worldwide beginning to open up, we anticipate a strong uptick in demand and sales that will become apparent by Q4 of 2020 or latest Q1 of 2021 this is when we believe pre-pandemic levels will be reached and then exceeded.
Dubai’s is one of the safest, most proactive countries to visit, live and work in, and an ideal hub for business, tourism and innovation. The market is now boosted through improved affordability following price falls, relaxed foreign business ownership regulations, the UAE Central Bank’s removal of the 20% cap on bank real estate lending, increased economic activity due to Expo, relaxed visa rules, the reduction of government fees and the formation of a higher committee that ensures differentiation and value-add.
Expo will, of course, drive forward the vision of Dubai. It is not merely the preparations and the happening of the event itself, which now, with the postponement, are elongated, building even more excitement and success, but also the after-effects that we believe will have a positive impact on the real estate sector, with Expo 2020 representing a gateway to the world, putting Dubai on the world stage, business relationships being formed, and tourism being attracted in the long term.
A SYNERGY BETWEEN DEVELOPERS AND INVESTORS
Developers have to consider the repercussions of oversupply as they benefit from the macroeconomic fundamentals set by the government. However, it is important to note that only the wrong types of properties are oversupplied.
Some segments have been more resilient than others. The luxury segment, for example, is experiencing the most substantial slowdown in demand. Reports have stated that buyers are discouraged when it comes to purchasing expensive properties, which usually come with a starting asking price of at AED 2 million.
It is essential to establish the USPs of a property before developing it; location, pricing, and amenities are all details to study in-depth. Developers should identify their niches and cater to the specification of their respective market. History has shown that quality developments that are adapted to changing market conditions and meet and surpass customer needs and investor aspirations can survive even the worst slumps in the market.
We need to understand that today, property seekers are looking for more than just a home; they are in search of a lifestyle that a property represents and enables through its distinctive features and amenities, location, connectivity and design, among other important factors. With better legislation comes a demand for state-of-the-art mid- and high-rises with innovative features and instilled with the creativity that the global property market is yearning for.
Market trends need to be keenly observed, and developers should note segments that have been more resilient than others. Comprehensive research has to be carried out by developers to break down the needs and wants of a diversified market as trends evolve rapidly, with some new trends having emerged in the property industry due to the pandemic in terms of property size and amenities. Developers who are not able to transition or adapt to the changes will produce an oversupply of properties that are not demanded by the market. With the growing number of buyers slowly surpassing the number of renters, developers have to consider building for a clientele that is looking for long-term comfort.
At Azizi, our developments are unlike those of our competitors in terms of locations, pricing, sizing, amenities, and offerings, all of which differentiate us and give us a competitive advantage. MBR City, for example, is host to budding, outstanding, master-planned communities, and Al Furjan, the new growth corridor of Dubai, with its recently completed metro link and accessibility to the Expo 2020 site, is an up-and-coming area as well.
We now live in a digital world in which the pandemic has heightened the possibilities of investors. They now have easier access to virtual property tours from the comfort of their own homes. This technology is now also utilised to tap into global markets. Virtual property tours, video calling platforms, and frequent, transparent project updates will easily unlock new markets and connect developers to a wider spectrum of investors, establishing a bond between buyers and developers and enhancing the understanding of current market needs.
This is what the sector needs to build on, while also emphasising Dubai’s leading local and international efforts, with, for example, free stem cell treatments being given, international donations being made, and much more. This showcases Dubai’s world-leading safety and proactive approach, thereby attracting investors and effectively helping stabilise the market. It is high time for developers, brokerage firms, financial institutions, regulators, and policymakers to join hands and align in facilitating and encouraging the process of investing in property — a synergetic undertaking that we are well on our way to achieving.
Oversupply can hinder profitability and major stakeholders, such as the government, developers and investors, should work in unison to ensure a balanced control of demand and supply is in play. As the government eases legislation and paves the way to bringing in investors, developers have to understand the market and possess an innovative mindset. Investors should also convey their constant change in needs to ensure developers are constructing according to the current market trend. It is now the responsibility of industry stakeholders to act, build and capitalise on government initiatives and enhanced legislation, leveraging them to boost and meet demand for the right kind of properties and develop accordingly.
Any opinions expressed in this article are the author’s own
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