Different people react differently to challenges. For Dubai-based real estate firm SPF Realty, the crisis in the market turned out to be the right time to expand, and most importantly, establish themselves, while most real estate firms tried to cut down costs by executing mass layoffs or moving to smaller and cheaper office space.
Founded in 2006, the firm is headed by Mahendrapratap Singh, Kalpesh Sampath and Ranjeet Chavan, who believe that SPF's chosen path during the recession will eventually help the company when the markets get back on track. In a freewheeling chat with Property, Sampath talks about the company, the markets, the reality, prices, future and much more.
How difficult was it to stay afloat during the global financial crisis, especially because we witnessed the closure of so many real estate firms?
We tried a few different things. One of them was that we started to expand soon after the crisis struck. We started the process of expansion in 2009 and took conscious efforts in the latter half of the year to recruit more people. It is a lot cheaper to expand when the market is down because everything becomes cheaper. We believed that business was going to be there because recession was only a state of mind as far as the market was concerned. So we thought if we could sustain and establish ourselves during tough times, then when things improve we can have recognition and a brand in place which will allow us to gain a large amount of market share. Another important thing we did was to launch virtual tours during this period, which I believe was a major driver. Providing excellent service to the client was another area we focused on. We made sure that during difficult times, wherever possible, we were supporting our clients and trying to find solutions for them.
How does consolidation help buyers and sellers?
It helps buyers and sellers save money. Consolidation is a process where a buyer who is making a payment gets a considerable discount of close to 40 per cent of the payment he is making. For the seller of the credit note, he is stuck and doesn't have the money to pay forward, so he needs to get rid of the credit because the project is cancelled. For example, if a seller doesn't want to wait for Nakheel to pay it back after five to six years, through consolidation he can get his cash immediately and get Dh600,000, instead of Dh1 million.
You mentioned that the concept of virtual tours helped the firm to a great extent. What is it all about and how does it work?
I do believe that it is a trend that we will see increasingly in the future. We are one of the first in the industry, to convince owners to go for virtual tours. Virtual tours are really helpful for buyers and agents. We give an interactive feel to the whole concept; buyers can have a 360-degree panoramic view of the property, go through floor plans and see the bedrooms, kitchen and so on. It is not a static version of a tour; it is very dynamic. Our website carries several properties that are featured in virtual tours. Prospective buyers can browse through various properties and choose the ones they are interested in, so that we can take them to those specific properties, rather than taking them all around the city.
Real estate agents have been claiming that the market is getting busier, especially in the past two to three months. What's your take on this? What's the reality in Dubai's realty market?
Definitely, things are getting better. In the last two to three months, we have seen a considerable increase in activity. Actual transactions are happening now and the number of enquiries has also gone up significantly compared to the summer period. June, July and half of August were quiet, but from September onwards we have seen an increased interest from buyers. General consensus is that it is going to be another year at least before prices begin to go up, but we believe, in price terms, we are very close to the bottom, if not at the bottom. Lots of end-users are coming into the market now simply because units are far more affordable compared to where they used to be and where they are in any other country in the world. Banks are also starting to finance more freely than before. It is really cheap to buy a property now. We get a lot of calls and enquiries either generated from our print ads or through online presence. We see that prices will stabilise and the decline which has been happening over the past year and a half will be arrested, especially in the townhouse and villa segment where there is virtually no supply. There are buyers for good quality units in good locations on the market. For example, we recently sold 20 apartments to one investor in Dubai Properties, Executive Towers on Shaikh Zayed Road. These are low-priced towers in a good location. We feel that this is an area that will pick up once the infrastructure in and around the vicinity is ready. Then the pricing will pick up as well. Downtown properties which are close by fetch about Dh1,100 to Dh1,200 per square foot, while Executive Towers properties cost Dh750 to Dh800 per square foot, which is significantly lower. But, of course Downtown has its own charm and other USPs, but the price difference between these developments looks inconsistent.
The apartment segment seems to be under pressure due to an oversupply situation, but there seems to more demand and less supply in the villa segment. How do you look at this trend?
There have been delays in many projects in the villa segment because Nakheel, due to various reasons, decided to delay Al Furjan, Jumeirah Park and Jumeirah Village Triangle, even though that was almost complete. As a result, there is a limited supply in the townhouse and villa segment, so prices for these units are expected to be stable. We think that in the apartment segment, the environment can be very challenging due to the oversupply situation in the market. What we believe is that there are drivers that can be put in place to help the market sustain the pricing and also absorb some of the supply that's coming up. We feel in the long-term, the government and major developers need to look at major structural changes. The visa rule is one of the things that needs to be looked at again. I think clients are very apprehensive about the six-month visa, as they want a longer visa term for investors. If you can have certain things changed, I believe more and more businesses will come in and so will investors. If you look at India, half of the story is really foreign influence. Many foreign firms have already set up their headquarters in Dubai and more firms should come here. Of course there is competition from India and China, but there are lots of things Dubai can do. Once more businesses and people come into the market; the demand for residential units will rise naturally which will help the market bounce back.
SPF is a real estate firm that sells properties in Dubai and India. What according to you is a better place to invest an NRI based here — Dubai or India?
If you are going to invest in your own country, you are always going to be more comfortable than investing anywhere else in the world. However, from an investment point of view, I am convinced Dubai is a better investment for an NRI compared to India at the moment, if it is a middle to long-term investment. If you invest in Dubai, you may not see the prices appreciating substantially in one or two months, but if you are an end-user planning to stay here for a longer period of time, then this is the place to invest because when you sell this property ten or 20 years down the line, it will definitely prove to be a wise investment.
Company's timeline
2006 SPF was set up by Mahendra Singh. The firm's first office of just 40 square metres was located in Arbift tower in Deira with just four staff.
2007 Real Time Real Estate owned by Kalpesh Sampath merges with SPF. Additionally, Ranjeet Chavan joins the firm as a new partner.
2009 SPF moves to a 4,000 square foot office space on Shaikh Zayed Road.
2010 The firm wins the "Best Website Award' presented by The Arabian Property Awards. Also, SPF achieves real estate sales worth Dh500 million.
2011 SPF plans to expand into the building and facility management segment. Increases real estate brokerage sales force.
