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“It’s not a catastrophe for Dubai property market”

April 2016

Ismail Al Hammadi, Managing Director, Al Ruwad Real Estate, Dubai, tells Wealth Monitor Dubai property market is not slowing down. Rather it’s just a correction of rates and a rebalancing between demand and supply

Could you please take us through in a bit detail about Al Ruwad Real Estate, how did you start etc.?
Al Ruwad Real Estate provides complete property related services ranging from Project Planning, Real Estate Consultancy, Property Management to Property buying and selling, Leasing and Brokerage. Al Ruwad is a one-stop shop for all types of property investors, either corporates or individuals. Initially, the idea behind starting Al Ruwad was to venture into property consultancy in Dubai as that was the area where we found opportunities. My background in real estate gave me considerable edge and advantage to start this business. I have 20 years of experience in Real Estate handling multiple projects in Dubai.

Overall, the 20 years of my career in Sales and Commercial Operations in the Real Estate sector enriched me professionally and enabled me to develop deep understanding about Dubai property market. Al Ruwad is a brainchild of that experience. After two years of operations of the Consultancy business, I decided to expand and include other activities of Real Estate business, such as brokerage, etc.

How do you see the current Dubai property market conditions?
Contrary to what many say, I believe Dubai property market is not slowing down. Rather it’s just a correction of rates and a rebalancing between demand and supply. There’s a pretty fresh supply coming into the market, which in many cases is outstripping the demand. Dubai is expanding and various real estate projects are coming up in areas where nobody had expected so 5 years back. Areas like Remraam, JVC, etc. are seeing new interests from residents and nationals moving in those areas.

Whatever therefore is happening in the market, we shouldn’t be scared of as this is a normal and healthy development. If markets continue to go up without any correction, investors will face the same situation as they faced in 2006-07 when there was too much hype built around property market. Today, thankfully, there’s no speculation, either in property sales or leasing. Despite the correction, Dubai property market is still giving the average yield of 7% yield on both sales and leasing side, which is higher than many other property hotspots around the world.

Going ahead, do you expect the ROI of Dubai property market to go up?
Dubai property market offers unique value proposition as it offers quality lifestyle, zero taxation and a world-class infrastructure, which remains unparalleled. Many investors who bought in the boom years before 2007 may find it a tough market as property rates have come down from the peak. On the other hand, investors who entered the downturn phase of the cycle are reaping capital gains now, since low property prices have resulted in higher yields. So it all depends on which point of price cycle one has entered the market.

Where do you see the market now and going into 2016?
I’m very optimistic that the prices will surely move up in the near future. Nevertheless, the correction that we’ve seen over the last several months has been immaterial. A correction of 5-10% in Dubai property prices is not a huge number overall. It’s not a catastrophe for Dubai property market. Rather it’s a normal phase.

Last month, Dubai Land Department statistics revealed that on a single day registered property transactions in Dubai jumped to Dh1.4 billion, one of the highest daily property transactions registered with DLD in recent times. This shows investors’ trust is returning in market.

Do you see demand for affordable housing increasing in future?
Yes of course. Dubai property market cannot sustain and serve only high-end and rich investors always. We’ve seen demand for affordable property segment at much higher level than luxury segment, on both sales and leasing side. As much as 70% of demand is coming for affordable and 30% for luxury properties. That’s why you’ll see many developers launching affordable housing projects as there’s where the growth lies.

What’s the best option from the point of view of an investor: buy or rent property in Dubai?
Our strategy is to first identify the needs of clients and then propose the solution. As an advisor, we look at client’s appetite, financial conditions and their requirements, before advising. Understanding the client’s needs and meeting their expectations is the first priority.

Al Ruwad aims to be among the top 10 property consultancies in the region by 2021. Do you have plans to go for property development?
It’s too early to say that. My dreams are definitely big, but I like to focus more on achieving immediate targets than speculating on future plans. At present, I see myself as an adviser to property developers for the coming three years.

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