Any analysis on the real estate industry ends up being earnest, overweening and invariably dull. Despite the importance the sector holds in the economy, it might as well be all collated under the title: “The Vanished Debate”.
Real estate analysis, when not superficial, is almost entirely confined to the halls of academia where it moves against the canon. Even there, only some citadels have proved stormable. As countries look inward and, simultaneously, towards the future, data analysis is considered untouchable — the more we have the better it is.
However, it is worth mentioning a few patterns that seem at the very least challenging the discourse. As Dubai’s real estate committee gets down to its task of providing direction, there are a few areas that it needs to consider over and above the various suggestions already out in the public sphere.
Control the noise
The first is that there is too much noise in the data on supply. We appear to not even be able to converge on the number of units delivered on a yearly basis, let alone the number of transactions conducted. To be sure, there is always bound to be a lag between the time a sale is conducted and when it is recorded.
However, this lag cannot account for the discrepancy in the number of units delivered. This has been pointed out over a number of years, and yet the disparity continues to exist … at the expense of the commentary and credibility of analysts.
Data on supply delivered continues to have large variance; the difference between the lowest and highest estimates varies by a factor of two. This is simply bizarre and tantamount to guessing. Meanwhile, a brief consultation of the internet will show that everyone has a figure of what the available supply is.
Get the data right
Everyone is a critic these days, but whilst everyone is free to voice their opinions on the outlook, that privilege must not extend to the domain of facts. There has to be convergence on certain statistical norms for transparency to increase.
The “measurement” problem and data capture is high on the list of issues that need to be finally put to bed.
Data capture extends to transactions as well, especially as a number of data providers have admitted that there is a problem of double counting; i.e., when the unit is registered in the off-plan segment, and then again when it is registered.
Developers and brokers clearly have an incentive to inflate their sales figures and do not include data on the number of units that are subsequently in “default”. These have to be clearly delineated at the Land Department level as the data exists through inflows in the individual project escrow account.
The same data allows for insight into the number of units that each building has (linked to the building unit), which implies that developers who go for launches of only a certain bouquet of units will not be able to obfuscate the supply pipeline (another variable that nobody seems to agree upon).
To enjoy being insulting is a youthful corruption of power. You lose your taste for it when you realise how hard people try to get things right, how much they mind, and how long they remember.
Every age that goes through a maturation of an industry in testing times feels it their birthright to criticise the present. It almost becomes a cliché to attack, a pastime that many critics indulge in, well into their middle age.
However, as we await the decisions of the real estate committee, it is worthwhile bearing in mind that one of the primary objectives is to place data in the public domain that is credible and subject to worthy analysis.
One of the many problems is that everybody feels that they have a competence in indulging in criticism. This is not surprising given the democratisation of the literary medium of social media.
Even if it sounds utopian, the ultimate goal should be that the underlying reality should be there to support it, rather than having herd opinions and social anxieties take over the discourse. The debate then may not cease to be dull, but at least it will not be cliched and regurgitated.
Instead, it will be infused with the opposed qualities of freshness, energy and reverberation of voice that deserve legitimate scrutiny.
Sameer Lakhani is Managing Director of Global Capital Partners.
