He comes across as an eternal optimist. Ryan Mahoney, suave and fervent, shows unflinching faith in Dubai's real estate sector. Without mincing words, he says drastic austerity measures such as mass layoffs and cutting down on infrastructure development are often knee jerk reactions in a very slow market which will affect companies adversely in the long run — as and when the market gets back on track.
"Although we have reduced our costs a lot, we decided not to go any further as we felt we needed these resources. The reason why we did this is because we ultimately believe in Dubai and its positioning. We believe that this market is here for a long time. Dubai's role as a facilitator for finance, transport and trade will continue to grow in the years to come."
While excess stock continues to put downward pressure on property prices in Dubai, Ryan remains positive saying, "Inevitably, all of this stock will be absorbed and there will come a point, although it's hard to believe this now, when the stock in the market is not going to be enough. It will happen at some point, but we don't know when. Maybe it will take a few years. We know that this is a very slow point in a cycle and there will be many such cycles. It is part and parcel of any market."
However, he admits the market continues to pose immense challenges to developers and sellers. "If you are a developer, the market hasn't got that much better frankly, it's just as it was two years ago. If you are a seller, it still continues to be a tough market. If you are a buyer, it is getting much better." No doubt, for buyers it is a dream scenario. Agents are chasing them as enquiries have dried up, and even if there are enquiries, the conversion rate is less. Excess supply means buyers are spoilt for choice, especially when there are some really good deals on offer.
However, Ryan says the downturn has forced realism on people's mind. He quickly adds, "No one can say this government isn't proactive; no one can say this government is not doing what they can do to get things right. Although for an agency it is incredibly tough even to break even in this market, let alone make money, they should continue to have faith in the market."
Abu Dhabi, on the other hand, is getting ready for the handover of a number of developments in the near future, which, says Ryan, will have no immediate impact on Dubai's real estate market. "
There will be a lot of people moving to Abu Dhabi when the new supply comes online, but I don't think it is going to happen overnight, because it is not going to be as cheap as Dubai stock.
"What will make a big change is when similar properties are available at a similar price. Also, people don't live in Dubai only because of convenience or comparatively cheaper rents; they live here because they prefer Dubai. But a lot of people want to move to Abu Dhabi because they are tired of having to drive every single day. But for the foreseeable future there will be a lot of people who prefer to live in Dubai and be happy with the commute because they have got friends and schools in Dubai.
The introduction of strata regulations will help investors regain some confidence in the market. Over the next 12 months or so, we will see a lot of changes with regards to strata. It has taken a long time but definitely there is some movement right now. I think what this will do is give people transparency with regard to service charges, which will help them better understand what their investment will do. If you know what the service charges are and the owners association is taking control of the building, they will try and reduce the service charges as best they can. Service charges will have a big impact on the overall return on investment. The implementation of the regulations will really be good for investors, homeowners and tenants.
In the sales market, the number of enquiries has fallen but only by a small margin. What's significant is the number of people who conclude the transaction has fallen dramatically. If you are a buyer, and you think that after two months you are going to get a better deal, you are not going to buy. That's what's happening right now. Buyers are not investors anymore; they are generally end users, so they are taking time to get what they want and get it at the price. They want to be absolutely sure they get the best price and best possible deal. They don't feel pressured, so they are taking their time. As people start to see a clear indication that the prices have bottomed out and in some cases increased a little bit, it will give people a sense of time pressure and they will start concluding the transactions — but we don't know when this will happen.
Lenders are making efforts to attract clients, but only [those] clients who meet their criteria. If a person has very good collateral, they are willing to give him good rates. Rates are getting increasingly reasonable but it is for a small number of people. And that percentage is too small to have a real impact on the market. So, rather than lowering the rate for that very niche clientele, in order to make an impact on the market, mortgage should be made available to a much broader segment even if the rates are a couple of per cent higher. That would change the market. If you are dealing with only 5 per cent of the market, you can offer them whatever they want and it won't make a difference in the market.