The acquisition of Cluttons Middle East by international real estate advisor Savills is one of the highlights in a period already punctuated by strategic alliances and takeovers in the real estate industry. Savills, which is set to end its arrangements with Core, takes full ownership of Cluttons Middle East, creating a strong head start for the new business entity on account of Cluttons’ more than 40 years of track record in the region. Cluttons will be rebranded Savills, but the entire Middle East team will be retained.
Property Weekly spoke to Mark Ridley, deputy group chief executive of Savills, and Richard Paul, head of professional services and consultancy at Cluttons, about the acquisition and what it means to the industry.
There have been a few strategic alliances, mergers and acquisitions announced in the industry. How do they reflect on the status of the industry? In your case, what is the significance of this acquisition?
The acquisition of Cluttons Middle East gives Savills its first fully owned presence in the region, having previously operated through associates. This is consistent with Savills’ model elsewhere in the world. It will also provide a critical link between our European and Asian businesses. The real estate market is consolidating globally, and we expect further mergers and acquisitions as companies in our sector gear up to fulfil the increasingly international needs of our clients.
How will the acquisition affect existing relationships of both parties in the UAE?
Cluttons has developed an excellent reputation in the Middle East over the last 40 years, but has never been able to effectively leverage a global network, which is now possible through the Savills acquisition. The clients we have spoken with welcome the additional firepower Cluttons Middle East now has and the ability to provide a more comprehensive client service, both within and outside the region.
What will be your focus as the company concurrently deals with internal issues such as corporate culture as well as the challenge of remaining competitive in the industry?
We will be focusing on delivering the best service for our clients and ensuring there is continuity. We see the Cluttons Middle East business as a platform for further growth and will be strengthening existing service lines as well as introducing new services.
As we move towards 2020, what will be the key areas for Savills in the UAE market?
Regionally we will be focusing on Cluttons’ existing footprint and looking to expand our operations here, particularly in Saudi Arabia. From a service line perspective, we will be focusing on Cluttons’ existing portfolio of services, but will look to leverage Savills global expertise in areas such as capital markets, hospitality, building and project services and tenant occupier services.
Any trends that you notice in the residential market?
The local economy continues to diversify, which may lead to long-term sustainable growth. Also, Dubai’s reputation as an international hub for trade and finance is being further strengthened by various proactive government measures. This will have a positive impact on the residential market. There is sufficient availability of investment-grade products in the market to meet any increase in demand.
However, there are few pockets of the market with large anticipated supply and limited social and civil infrastructure; these locations may witness a price adjustment in accordance with the local dynamics. Also, projects offering product mix and specifications not aligned with market requirements will find it increasingly difficult to sell.