Figures from the Land Department highlighting that transactions are up 25 per cent on a year-over-year basis — off- plan transactions registered a near doubling of transactions in the same period — were quickly dismissed by most pundits as a false start. Even as figures suggested that in select areas prices registered mid to high single digit gains over the last year.

Given the economic uncertainty, heightened given the imminent imposition of the VAT, it has been unsurprising that most commentary has focused on price declines in the luxury segment. Yet, it remains somewhat puzzling that more attention has not been given to the green shoots that continue to proliferate. Why is this happening?

There are two principal reasons. The first is that as investors and analysts, we all rely on selective perception. Not only do we tend to overvalue what we already own, we tend to look for information that confirms our opinion, overlooking evidence to the contrary. This is referred to as the confirmation bias, and examples abound of this plaguing the academic and commercial literature. Objectivity demands a holistic and comprehensive analysis of all available information. Every forecaster who predicts a market top should be able to explain why a rally could continue awhile.

Likewise, every pundit who assures us that economic growth will remain robust, needs to highlight the recessionary risks inherent in the ecosystem. For every transaction, there are at least two points of view, and analysts would do well to take a page from the lawyers and learn to argue all sides of any investment.

Instead, what happens is that emotions get in the way, clouding our judgement, in what Keynes referred to as the “dark forces of time and ignorance”. Often, we believe what we want to believe, and as history shows, the cost of such an approach can be quite expensive.

The second reason has been the changing nature of buyers, in response to exogenous movements in the world economy. For a confluence of reasons, traditional buyers have given way to a new category of investors. These investors, whether individual and/or (increasingly institutional), have emanated both from the Middle East and overseas.

This changing buyer patterns has sparked a consolidation wave among brokers and developers alike, as both have scrambled to cater to the increasingly nuanced needs of these more sophisticated buyers. In point of fact, even as the current real estate cycle has led to price declines at the top end, the middle has remained resilient.

This reinforces data that clearly shows that over the long run, returns have been dominated by rental rates. even more importantly, higher rental yields have been the greatest predictor of future gains. The fact that this phenomena is occurring not only points to a market maturation, it also defies analysts who continue to predict a gloom and doom scenario. To be sure, lower oil prices and other macroeconomic factors have moderated the pace of economic growth. Not only has there been consolidation across sectors, new business activity has been below the mean levels expected.

Despite these headwinds, mortgage transactions have continued to ratchet higher, belying claims of tightening standards. More importantly, developers have been more responsive to investor and end-user needs and have responded with an increasingly imaginative incentives.

More importantly, in the secondary market, institutional investors have been quick this time around to step in and acquire assets perceived to be below fair value. It has been for these reasons that despite retrenchments, the real estate market (barring the luxury segment) has been resilient in this cycle.

What happens in the future is anybody’s guess. In the final analysis, the adage applies: if analysts are super smart, why are they not super rich?

History continues to demonstrate that real wealth has been created by those who ignore finance theory. Reflecting the disdain of such a bias-oriented approach, a prominent fund manager wrote in 2014 that analysts have lagged their peers in other fields in making certain that their findings have been statistically valid.

And likened their approach to “pseudo sophisticated charlatanism”. This can be put another way — to create wealth, sometimes have to be willing to be very unpopular.

The writer is Managing Director of Global Capital Partners.