Dubai: A house is likely to be the biggest investment a wage earner makes. Most average salaried people invest their life savings in property with the hope of spending the rest of their lives in comfort in their own home.
However, a large number of them also invest in property to cash in on projected income based on price appreciation and premium. Many property investors, over the last few years, have also burnt their fingers trying to make ‘quick bucks' as property prices dwindled — wiping out life savings — and resulting in insolvency.
While this episode has been replicated all over the world in bits and pieces, parts of the UAE's real estate market witnessed the worst, along with property investors in the US and other parts of the world.
However, real estate markets globally are performing better this year compared to last year, with a few exceptions while emerging markets remain the key growth areas, a top global expert said.
"The UK property market is recovering and regained most of the losses in some areas, especially in London, while in the United States the markets performed better last year than in 2009," Alan Robertson, the newly appointed Chief Executive Officer of Jones Lang LaSalle's Middle East and North Africa operations, said in an exclusive interview with Gulf News.
"We are also seeing exciting changes in the Bric [Brazil, Russia, India and China] countries where property markets are growing rapidly."
Robertson, a seasoned property professional, was appointed CEO of Jones Lang LaSalle in the Middle East & North Africa region in June. His principal responsibility is to manage the firm, setting and implementing the strategies for the growth of Jones Lang LaSalle across the region through the delivery of quality services to the firm's clients. In addition to his firm's management responsibilities, he is becoming active in the real estate markets across the region, providing strategic advice to property investors, developers and occupiers.
The property market in the UAE is going through a tough time, although in some areas there are signs of a slight upturn.
Robertson elaborated his views on the property market. Excerpts:
GULF NEWS: Could you give a glimpse of the global property market, especially the US and the UK markets?
ALAN ROBERTSON: The UK market started to pick up last year, especially London. Between 2007 and 2009 — the UK's commercial real estate value fell 30-50 per cent — both capital value and rental values. In the best locations those losses have largely been recovered over the last year. There has been a flight [of investors] to better quality and locations, and the prime markets in the UK benefited from that.
However, on the High Streets across the UK, retailers have been struggling partly because of oversupply and partly because of the fact that consumers are not spending enough.
Europe remains a tough market due to the ongoing problems in the wider economies. Five years ago, investors were buying malls in major metropolises in Romania and Bulgaria, but investors have now retreated to the more established markets where, for the same yields, they have been able to buy more secure assets.
In the US, the property market did better last year than in 2009. There are encouraging signs in parts of the US property market.
However, it might take a while for the overall market to recover.
What about emerging markets such as India and China?
We are seeing some exciting changes in the Bric countries. The property markets in China, India, Russia and Brazil are growing. These are the key growth markets.
We, for example, have doubled our presence in China. We have more than 7,000 professionals currently serving that market at Jones Lang LaSalle.
What about the GCC markets?
The property market in the GCC will recover and in some parts of the region, it is showing signs of recovery.
We see Saudi Arabia as a major growth area. The combination of demographics, the growing economy and government activity is resulting in considerable activity in the real estate markets.
Qatar will also pick up due to the investments linked to the World Cup 2022.
What is your view on the UAE's property market? Do you think the market has returned to a growth mode?
The UAE's real estate market is currently undergoing a tough time. The industry is suffering from oversupply in some segments. However, there is light at the end of the tunnel — in some areas.
The office market is definitely becoming more active as landlords are becoming more realistic and adjusting their expectations in line with market realities.
In some cases, rents have been adjusted to market prices, and this is encouraging occupiers to be more active.
In our own operations, we have seen a 50 per cent increase in the number of transactions.
During the first half of 2011, we completed 62 transactions in the office market, up from 42 in the first half of 2010.
Obviously you are new to Dubai. However, based on your knowledge on the fast development of Dubai between 2002 and 2008, how do you see these developments?
I haven't seen anything like Dubai's fast growth in real estate and I cannot think of anything comparable. The quality and scale of build is stunning. The best schemes here are as good as the best properties in the United States — world class.
Although there are short-term challenges, the world-class assets built in Dubai are for the long term, and should give it a good competitive advantage going forward.
What about the Abu Dhabi market?
The Abu Dhabi property market is also going through a bumpy ride, like Dubai — albeit a few years later in the cycle. The market is going through some short-term challenges.
There are, however, demand-side pressures to adjust to the market. When it happens, we predict the market will pick up.
In the long term, Abu Dhabi could prove to have been quite astute with its choice of development initiatives such as Masdar City.
Together, the two cities - Dubai and Abu Dhabi — are reshaping the urban landscape of the UAE.
What is your view on affordable housing in the region? It seems developers have only focused on the upmarket luxury segment. What about housing for the middle income group?
We see a major opportunity and growth in this segment. Saudi Arabia is investing heavily in mass housing. These moves also include staff housing projects for large corporate entities.
Elsewhere in the Gulf, governments are looking at developing mass housing for the national population.
Finally, a lot of consultancy and brokerage firms are releasing research reports on selected property markets that often contradict each other drastically. These, more often than not, confuse people looking for a direction. What are your thoughts on this?
We have a large research team and everything that we say is underpinned by research.
However, you are not going to get all researchers to agree on the same thing. We base our research on the overall market situation, and our activities in the transactional and valuation sectors mean that we can spot emerging trends quickly.
Profile
Alan Robertson, holder of a Postgraduate Diploma in Land Economy (DipLE) and an honours degree in science (BSc Hons), both from the University of Aberdeen, Scotland, has some 28 years' experience in the commercial real estate market.
From 1983 - 2008 he was based in Scotland, where he specialised in a leasing and development consultancy. He advised numerous developers and institutional clients on a large proportion of the major office and mixed-use development projects in central Scotland.
Robertson was appointed country manager for Scotland in 2005, having previously served as director in charge of the Edinburgh office. Prior to the merger between Jones Lang Wootton and LaSalle Partners in 1999 he was a partner in Jones Lang Wootton, with responsibility for leasing, development and tenant representation activities in the Edinburgh office.
He joined Jones Lang Wootton in 1988 and became a partner in 1989. Prior to that he was a graduate trainee and surveyor with Hillier Parker (now part of CBRE).
Prior to taking up his Mena role, Robertson spent three years as managing director of Jones Lang LaSalle in Turkey. During his time there the business doubled in size, with several new business lines being established, including project management.
In addition to his leadership and management responsibilities, he was active in the Turkish property market, specialising in offices, development consultancy and logistics sectors. His clients included a variety of Turkish and international developers, investors and occupiers.
He helped establish Jones Lang LaSalle as one of the leading firms in the commercial real estate market, advising developers such as Soyak, Torunlar and area property partners on a variety of development projects. In addition, he provided consultancy services to multinational corporate occupiers such as BP, Vodafone and P&G on their office requirements in Turkey and neighbouring countries.
He is a Fellow of the Royal Institution of Chartered Surveyors (FRICS).
Huge coverage: clients in 60 countries
Jones Lang LaSalle is a financial and professional services firm specialising in real estate services and investment management. More than 41,900 people in 220 corporate offices serve clients in 60 countries from 1,000 locations. With a 2010 global revenue of $2.9 billion (Dh10.6 billion), it is the only firm in the real estate category to be included in the list of the World's Most Ethical Companies by the Ethisphere Institute. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse real estate money management firms, with access of $43 billion (Dh157 billion) of assets under management.
The company employs 110 professionals in the Middle East and North Africa. Coverage includes a core-territory of 21 markets as well as specific service line coverage throughout Africa, adding 50 countries to its geographical coverage. In 2010, the company advised on real estate projects with a total value of $200 billion (Dh734 billion). In 2010, it advised on funds and transactions with a total value of $1 plus billion (Dh3.67 billion). It has full-service offices in Dubai, Abu Dhabi, Jeddah, Riyadh, and Cairo and dedicated team for Morocco, Maghreb and the Levant.
