The “greater fool” is actually an economic term. Simply put, it’s a patsy.
For someone to profit, we need a greater fool, someone who will buy long and sell short. Most people spend their entire life trying not to be the greater fool, someone who gets the hot potato and not the last seat when the music stops. The greater fool is someone with the perfect blend of self delusion and ego to think that he can succeed where others have failed.
Dubai has always been a hotbed for risk takers, people who have dared to venture into the unknown. It has been this verve that has shaped its zeitgeist and has allowed the city to rise from the desert in to the metropolis that it is today.
But in these troubling times however, we seem to have been hijacked by two contrasting narratives. On the one hand, we read and hear about the struggles of everyday life, businesses surviving by the skin of their teeth, and layoffs of friends that cause sadness.
Heavy on the contrast
On the other, we read about a “V-shaped” recovery in the asset markets as activity springs back to life. Never has there been a greater disconnect in the discourse as there is currently, and it is perplexing as to why this narrative exists in the first place.
Undoubtedly, part of this disconnect has to do with the data analysts that have sought to “spin” their way out of the current scenario. This is something that defies common sense in every sense of the word. The drawbacks of the data points in the real estate sector are well known and commented upon by now, and yet there has been no visible attempt to have a meaningful dialogue of how to overcome this “upward price drift” bias that has systematically contaminated the discourse.
The consequence has been that at the very point where confidence is needed to be infused towards reinvestment, there is apprehension because of the quality of the data and the stories that are being wrapped around it.
Not on most agenda
Of course, data points are hardly at the top of the list of priorities right now in most people’s minds. For the overwhelming masses, the need of the hour remains relief that is needed in the conduct of everyday life and business, as liquidity remains the key variable for survival.
However, for the contrarian to be able to act decisively in these times, data remains the critical driver to ascertain the road ahead. And to take the plunge where others fear to tread. Curiously, despite the proliferation of technological platforms, data remains as obfuscated as ever, with no distinction between primary and secondary market price differentials, no hedonic adjustment for payment plans, or for double counting of sales (offplan and ready).
The result has been a landscape littered with abject confusion, because there really is no feel for where the market prices are. This is not the greater fool that we need, or are looking for.
Now, more than ever, as residents scrutinize their rents, owners look for their return on investment, developers look to provide concessions, contractors look to shave costs, and Owners Association companies come under the microscope to reduce overheads, we need to have an informed populace that can readily access and assess the state of the market on a continuous basis in an unbiased manner. Such that they can take their own decisions.
Everybody needs to know where the market is, and technology is supposed to be the silver bullet in addressing this, rather than adding to the cacophony of confusion.
So many viewpoints have disappeared since the beginning of the COVID-19 pandemic amidst the vision of a glorious 2020. Dubai and the UAE will soon continue on its relentless march of progress as it always has. The destination may have become less clear from time to time, and the road ahead currently looks more arduous.
But this is how the “angel of history” moves, as Walter Benjamin once wrote: the storm of progress that smashes everything in its way as it drives into the future while “the pile of debris grows towards the sky”.
Whatever that debris, let it exclude the vitality and purity of debate of its citizens, residents and stakeholders, who, collectively shape its narrative, knowing that the discourse is as vital to its progress as anything else. Let us not lose the greater fools in our midst.
- Sameer Lakhani is Managing Director at Global Capital Partners.