As I’ve highlighted many times in this blog (heck, it seems to be almost every post!), real estate agents in Dubai have an abysmal reputation.  “Woohoo” you say, “now tell me something I don’t know”.  “OK”, I say, “I’ll do just that”.  Let’s start with:

REAL ESTATE AGENTS ARE PEOPLE TOO.

There, I’ve said it, the truth’s out, it’s legged it out the window, shot around the corner and belted off into the sunset.  Real estate agents are people too.

This post is about the other side of the fence, the things the good real estate agents go through for their clients, the difficulties they face in their day-to-day dealings and how hard the good guys work.  Believe me, I’m not covering for the bad agents - and there’s enough of those to go around this market - but having witnessed first hand how hard a good real estate agent works for his or her client, I think it’s time someone stood up for the good guys and took a stand.  That would be me.  Ahem.

In my naiveté I once thought that tech support or customer service was a hard job.  It’s very stressful having to deal with customers who only have problems with either your product or your company.  Being a good real estate agent though is far harder than that.  Buying a house is believed the be the second most stressful event of your life after divorce, so imagine that your job day-in, day-out, is to help people through this situation.  Even normal people can turn to jello, and I’m speaking from firsthand experience here as I’ve bought a house in this place.  Agents are expected to be available during non-office hours, because their clients are generally not free during work hours, they often have to do multiple viewings for someone who may not even be interested in buying at that point.  They act as a mediator between what is often two polar opposite opinions, and they’re often dealing with banks (and occasionally Govt and semi-Govt organisations) who don’t know their elbows from their other holes.  All in all it ain’t fun.

But, like any sales job, there is a buzz to it, and I’m not just talking about the money - which at times can be substantial.  Sometimes you’re blessed with really nice clients, and the rush you get when you know you’ve secured their dream home for them is magic.  That’s the good part of the job and it makes up for a lot of the hardship.  At other times it could be a particularly hard sale that looks like it’s going to fall through but you manage to keep it together and get it completed.

Real estate agents, at least good real estate agents, work hard and do a good job.  They don’t expect to be lauded for what they do, but they certainly hope you’ll give them a chance to prove their capabilities rather than pre-judge them based on other experiences.  I’ve mentioned this pre-judging several times, indeed it’s so important to us that it is even mentioned in our ethics statement.  The agents we have in Estate Real Estate face this battle constantly.

So remember, next time you deal with a real estate agent don’t forget they’re also a person too.  Honest

This was a question I walked away from an interview with Ben Gilbert from www.theworld.org with last week.  He had stated that many other people who he had talked to in the Dubai real estate sector had told him they believe things will pick up in the New Year because, well, they just have to.  Not a convincing argument, at least in my mind, so it made me reflect on why we think this will happen.

There’s no denying the fact that the Dubai property market has stalled.  Aside from writing blog posts I’m also webmaster for www.TheEstateAgentsDubai.com.  We did a survey this month of Dubai real estate agents, with over 170 agents completing the survey.  You can see what the press is saying about this by clicking here.  What did the survey reveal?  Amongst many other things it revealed that 77% of Dubai real estate agents who filled in the survey said they believe the market will rebound within 3-6 months.  That’s a healthy majority.

So it’s not just us who believe things will rebound in the New Year, it’s the majority of Dubai real estate agents out there.  Why do we believe things will rebound?  Experience, research, gut feeling, anecdotal information and yes, belief. 

Dubai has been hit by the global credit crunch, but it has not been overwhelmed by it - certainly not to the extent the US or Europe has.  It is in a stronger position than many other areas of the world.  Imran Shaikh’s quote, posted in this blog post, eloquently encapsulates this.  Secondly, global credit crunch or no, December was always going to be a quiet month.  There are 4 major holidays; National Day, Eid, Christmas and New Year, so it was never going to be busy.  This then takes us into January, the New Year, a time of rebirth and new beginnings.  Perhaps more importantly, by January the Dubai Government will have had more than 6 weeks to analyse, plan and start to action whatever it is going to do to help the Dubai property market. 

Perhaps this is where our belief comes in, but it is a belief based on fact and experience.  I’ve been in this country most of the last 15 years and I’ve watched it grow and develop into something rather special.  The belief I have in Dubai’s continued growth is rooted in that experience.  Our predication that the market will rebound early next year is based on a combination of the factors we see, and a belief that the Dubai Government cannot allow 30% of its total economy to simply stop producing.

Paul.

No.

Originally I was just simply going to leave this post as that - a one word No.  But then figured that might be a tad boring in terms of posting, and perhaps some justification of such an unequivocal position might be warranted.  Besides, I’ve a good stash of Kenyan tea bags I can make a dent in whilst I carry on writing.  Global Village rocks.

Buying a property here has become very elitist (notice I said elitist, not expensive).  Unlike in other, mature, markets there are no cheaper properties to purchase for first-time buyers or buyers lower on the property ladder.  The cheapest property available now in Dubai would probably be a studio apartment in International City for around Dhs 530,000 (about USD 141,000).  Couple this with the current credit crunch where lenders are bringing their mortgage amounts down to 70% or even 60% and all of a sudden it becomes much harder for the average borrower to purchase.  Many people can afford the monthly repayments, but finding a 40% deposit on a Dhs 5 mill home is a huge stretch for most people.

So why do developers not take advantage of this and build more low-cost developments?  The answer can be summed up in one word: profit.  More profit can be made out of high-end villas, or even better out of apartment blocks, than can be made with low-cost housing.  The cost to build a high-end apartment block is not that much more than a low-end one, but the profits that can be made are considerably higher. 

Unless there is either a glut of high-cost housing and it simply does not move, or there is some form of outside intervention, i.e. the Govt forces developers to build more affordable places to live, for the moment I cannot see any reason why a developer would choose to develop cheap housing.  This is one area where I believe the Govt would be right to intervene and force development of less expensive property for the masses rather than continue to focus on prestigious developments for the few.  Not having this balance is affecting a significant percentage of expats in Dubai, and that’s not helping the Emirates’ ability to retain manpower and evolve towards its world city goal.  Like any portfolio the property spectrum has to be balanced, and at the moment that simply is not happening.

Paul.

Worldwide things are looking pretty grim.  Obama was elected (ok, that’s actually good news), Germany is officially in recession and is expected to be followed by several other European economies.  China’s huge stimulus package didn’t have a great impact and it looks like GM will go under unless bailed out to the tune of USD 22bn.  I could go on, but the get the idea.

On a more local level there are several reports (here’s one example) that large developers and real estate agencies are laying off staff.  There is also a report that Emirates NBD, one of the largest banks in the UAE, has stopped lending to expats involved with several large real estate companies.  The next day Emirates NBD refuted this report despite Gulf News having a copy of the internal memo sent out to Emirates NBD employees.  Amazing.

There’s no doubt though that the UAE property market has stalled.  A recent survey by www.TheEstateAgentsDubai.com (of which Estate Real Estate is a founding member) has shown that over 50% of estate agents surveyed have done zero sales in the last month.  That’s an incredible drop in sales.

Where does that leave the Dubai property market now - plunging towards a crash landing or simply taking a breather for a while? 

There is considerable debate on what will happen.  The depth of the global recession is going to be abyssal, the burden on global taxpayers is going to be horrendous and the new regulations imposed on the banking and financial industries worldwide are going to stifle the sort of proliferate lending which helped to pump up the market in the first place.  All of this points to a crash landing of the hardest variety. 

On the other side we have the local conditions - the Government is flush with oil money, it has a tight rein on policy and spending and can react quickly to issues.  The bottom line is that the UAE and Dubai Governments cannot afford to let the real estate sector fall.  Let’s be honest, Dubai is a narrow strip of sand stuck in the Middle East - not the world’s most stable of regions at the best of times. Dubai, and the UAE as a whole, rely on confidence in their Governments and their policies to be able to survive.  Lose that confidence - and a real estate market crash would certainly achieve that - and everything goes belly up.

Based on these factors we believe that the market will restart early next year, and the first thing the Government needs to do to get that moving is to provide a means for buyers to obtain reasonable mortgages.  I don’t mean 95% LTV’s, but 85% or even 80% mortgages on internationally-reasonable terms would unfreeze this market almost overnight.  This can be accomplished by pressurising the banks to restart lending, or it can be done by the Government themselves (there have been rumours recently that the Government will start to provide some form of mortgage availability to the public).  However this is achieved the restart of mortgage provision has to begin before the real estate market can un-freeze and get back to business.

Paul.

Business 24/7 is reporting that from early next year Dubai real estate agencies will have to use escrow accounts to keep their clients’ money in.  This is a development we’ve been waiting a long time for and are glad it’s finally happening.

Developers have been forced by law to use escrow accounts for some time now, but real estate companies have not had access to them.  The law currently states that any funds from a property transaction, such as the deposit paid by the buyer, are to be cashed and held by the real estate company until the completion of the transaction.  This protects the seller, because the cheque is already cashed, and it protects the agent, because he is legally allowed to take his agents fee from the deposit under several sets of circumstances.  However all of this rests on one presumption - the real estate agency is honest.  The vast, vast majority of us are, however it is one hole in the Dubai real estate market we’re glad is being plugged.

So what does this mean to buyers and sellers?  Well, as yet all we can do is speculate as the law has not been released, however the largest part will be that deposits for transactions will have to be deposited into an escrow account run by the real estate company.  This will protect all parties because that deposit cannot be removed until a certain set of conditions have been met.  The seller is happy as he knows if the buyer pulls out he can claim from the deposit, the buyer is happy as he knows that his money is safe and the real estate agency is happy because he knows there are no potential issues financially.

Be aware that it seems this law is some way from being implemented, things won’t change tomorrow.  RERA have not approved any banks yet who can issue escrow accounts, and you can bet there will be the usual confusion over a new law.  Long-term this will be a great benefit to buyers and sellers of Dubai property, however in the short term it is likely to result in some confusion.

We welcome this news from RERA and would ask them to move this law into effect as quickly as possible.  It will directly help confidence in the Dubai property market (a probable reason why we’re seeing this news come out now) and should be pushed through ASAP.

Paul.

Changes are afoot in the Dubai property market, and you’d have to have been buried pretty deep in the sand to have missed them.  Due to the global financial crises credit is becoming harder to come by, at least in the short term, and there is the popular miss-conception that mortgages are impossible to arrange.  This simply is not true; mortgages – and remortgages – are still possible, you simply have to do a little more work to find them.  In this environment savvy property investors and potential buyers are looking for great deals in the market, and the last thing you want is to have your plans stumped by an inability to arrange a mortgage for that dream property that’s just come on the market at a great price.

We believe that the current credit freeze will last for a few months at worst.  This is based on several factors, but can probably be summed up nicely by a conversation that was related to me a few days ago.  A colleague was chatting to a contact and they were discussing the current lack of liquidity in the market.  The contact said he believed that as the banks had already hit their mortgage sales targets for the year they were waiting until the New Year to loosen up the purse strings and start to ease off on credit restrictions.  True or not?  Who knows, but having worked in sales for many years it has the ring of truth behind it.

However you can still get a mortgage and Estate Real Estate has worked with Property Finance Link many times over the past year or so to arrange mortgages and re-mortgages for our clients.  We’ve found them to be professional, educated and client-orientated as well as able to get a result.  Property Finance Link have been in the Dubai market since early 2004 and have spent that time establishing strong relationships with the majority of the banks and institutions who currently offer mortgages.  It is these relationships, and the knowledge inherent in dealing with mortgages day-in, day-out, that you buy when you use a professional mortgage broker.

Unfortunately mortgage brokers often have similar reputations to real estate brokers (if you’ve read other posts in this blog you’ll have noticed the reputation of real estate brokers is a constant theme across many posts).  This is why we take particular note of mortgage brokers who have come through for our clients.  I’ve used a mortgage broker myself, and I can whole-heartedly recommend them so long as you’ve got a professional broker who knows what he/she is doing.  And in the current climate, where arranging a mortgage has become harder, you need all the clout and woosta you can muster to get the result you want.  That’s the real reason behind this post…..it’s our attempt to help get the market a little more un-frozen by giving you information that’s useful and proactive.

If you are currently looking to purchase a property with a mortgage, or arrange a re-mortgage on your existing property, we strongly advise you to use a mortgage broker to get you the best deal.  It will save you a lot of hassle as well as increase your chances of getting the result you’re looking for.  We strongly recommend Property Finance Link as a professional broker who can give you the level of service you deserve.  We don’t give out these kind of endorsements lightly – Property Finance Link have had to prove themselves to us, and to our clients, on many occasions before we recommend them in this way – so rest assured that if you work with Property Finance Link you’re in good hands.

For more information on Property Finance Link we’ve uploaded the following pdf from them: click to read pdf.

Any comments on this or any other blog post?  Please let us know!

Paul.

CNN has just called the election for Obama, and on behalf of Estate Real Estate may we congratulate Barack Obama on winning the Presidential race.

Since I live in the UAE, and am not even American, why did I get up at 3am to watch the results?  Besides it being, as one BBC reporter aptly named it, the greatest political show on earth, I believe that Obama is going to be the better candidate in terms of American interaction with the world.  Without being too selfish that should help the likes of you in me in the real estate industry.  The financial world is interconnected, and for good or ill the current centre of that universe is the US.  If the US has a more pro-international President, and just as importantly a President who is a thinker rather than a reactor, it bodes well for us.

We wish President-Elect Obama the best for his Presidency and hope he keeps to his word of bringing Change.

Paul.

OK, I work for a real estate broker (kind of obvious given where this blog is hosted) although I’m not an actual broker, I work in IT.  But being in the industry, and having lived in the UAE for the best part of 15 years, I have more than a little experience of real estate brokers in general and how they do business.  Was that experience positive?  Na-ah.

Real estate brokers have a poor repuation in the UAE, and this is something that the Real Estate Regulatory Authority here in Dubai is trying to address.  Despite this the reputation still continues to this day.  RERA’s recent prevarications over when it will enforce its new rules has certainly not helped.  It’s left brokers confused, and buyers/sellers wondering who and what to believe.  We (and by we I mean Estate Real Estate) continue to hold to the belief that RERA will pull through, and as a reflection of this have been using their forms and systems for many months now.  But I digress, this isn’t a post on RERA, it’s a post on agent ethics, so lets get back to the point.

Estate agents, and agencies, have never truly been regulated in Dubai.  This has led to a free-for-all, and when you combine that with the rapidly growing market we’ve had over the last few years you’re going to end up with corruption, kick-backs, hidden costs, broken committments and all the other paraphernalia of an unregulated market run wild.  It’s no wonder real estate agents have a bad reputation - and don’t even get me started on developers.  But not all real estate agents are bad.  Honest.  Now obviously I’m going to claim we’re the good guys, but rather than take my word for it I encourage you to read our ethics statement by clicking here before even giving us a ring.  We hold ourselves to a high standard, and expect you to hold us to one too.

The nice thing about being in the industry is that we’ve worked with a substantial number of other agencies over the years and have found some of them to be excellent.  We’ve provided a non-exhaustive list here of some of the best.  Please understand this is not an endorsement of these agencies, nor are we advertising for them but it is a reflection of the good professional relationship we have with them:

1. Dubai Luxury Homes
2. DeGama
3. Oryx
4. Links
5. Edwards and Towers

Good real estate agents and agencies do exist in the Dubai real estate market, and yes we think we’re one of them, but the bottom line is you, the customer, needs to judge who’s good and who isn’t.  What we think is irrelevant, it’s what you experience that matters.  All we ask is that you do not pre-judge us on what other companies may (or may not) have done in the past.

So, to come back to the title of this post: are real estate agents and ethics a match made in hell?  No, I don’t think so.  I think you can have excellent agents with first-class ethics driven by a desire to provide world-class customer service.  But I also think those qualities have to be backed up by a corporate culture that’s fashioned out of a need for professionalism and a desire to do the right thing.  Ethics has to be a mindset, not a fad.

Paul.

Just a quickie update for frequenters of the blog.  Yesterday we updated the skin (i.e. the look and feel) of the blog to more reflect the corporate branding.  To put that in normal, human speak for a second, it just means we made it look more like the main www.eredubai.com site ;)  So if it looks different to what you’re used to, that’d be the reason why.

We’re also moving to a post-a-week schedule, rather than the current post every two weeks.  Things are moving quickly at the moment in the world in general, and Dubai property in particular, so we feel it makes more sense to post more often.  If you have any questions, or ideas for blog posts, please do let us know.

Finally we’re experimenting with a technology called Silverlight, brought to you by Microsoft - yep, that company we all love to hate.  All joking aside we’re quite fond of Microsoft at ERE, the main website is built using MS technology and we do tend to use their tools and technology in-house.  It should be noted though that this blog doesn’t use an MS product, we use a self-hosted Wordpress installation for this.

If you have any comments on the new look, please do let us know!

Paul.

Sooo…Cityscape is over and finished, the traffic at the Trade Centre is returning back to normal, and a lot of tired exhibitors are mooching off back to their offices with stacks of new business cards to file.  Was it worth it?  Did the exhibition carry on waving the flag of Dubai real estate, or did it tuck its figurative tail between its legs and surrender to the global credit crunch?  Let’s see.

For me the highlights were two large announcements, both close to the opening of the exhibition, and one rather telling quotation from a well-known figure in Dubai’s property markets.

Ask most people what was the first thing they heard about Dubai, and many will talk about the hotel shaped like a sail, or the world’s first 7-star hotel.  In my opinion the Burj Al Arab isn’t a hotel, it’s an icon and a statement.  It allowed Dubai to plant it’s sandy paw fair and square on the map.  This building almost single-handidly raised Dubai’s profile from what was a hardship post (yes, people were still on hardship posting salaries when I came here) to a desirable and interesting place to visit. 

Although it didn’t have as large an impact, the Burj Dubai, which is the world’s largest building, has continued to carry the Burj Al Arab’s flame and is standing as a monument to a Dubai’s great strides forward.  And now we have what will be the newest, largest, tallest building in the world - Nakheel’s new Harbour and Tower.  Bit surprised they didn’t call it the Burj Nakheel, but there’s still time for them to change it ;)  If Nakheel’s marketing get this right they can milk this project to continue helping Dubai’s stature on the world stage and help the Emirate to reach it’s stated goal of becoming a world city by 2050.  Large buildings like this are as much statements of intent as places to live.  This project screams “we’re here!” and lets the world know that Dubai’s not out of steam yet, even though the rest of the world is wading through a deep financial crisis.  Talk about sticking two fingers up at the conventional wisdom!

It cost the US Govt about USD 85 bn to bail out struggling AIG.  Meraas Development are stumping up in excess of USD 95 bn on the sprawling Jumeirah Gardens development.  This huge development is expected to be fully completed by the end of 2013 and will cater to 60,000 residents across 110m sq ft of partly new land.  This development is one of the few that justifies the moniker “mega” and, like the Palms and the Waterfront, makes significant use of building new coastline off the coast of Dubai.  Given the difficulties that some other developers are facing with liquidity constraints, construction costs, project delays and fears for the future I view this as much a declaration that Dubai’s real estate sector is healthy as much as anything else.

One thing that is obvious is that these developments are both high-end.  As much as the real estate sector here is booming, do we need more high-end developments or do we need developers to concentrate on low-end properties for lower income earners?  This will be the subject of a future post.

Quote of the week has to go to Imran Shaikh, CEO of Shaikh Holdings (developers of Sanctuary Falls amongst other projects).  His statement that, “We need to be aware that we are isolated in Dubai but not insulated” excellently sums up both Dubai’s strength and fragility in a single statement.  We’re bucking the trend, but we need to be vigilant and ensure stupid mistakes are not made.

That’s it then, another year another Cityscape.  I wonder what the situation in Dubai will be when the next one comes around.  Will we still be riding high, or will the phlegmatic bent of the rest of the world have brought us low?  I know which outcome I’m rooting for.

Paul.