An ebbing tide, too, can keep many afloat

• Last Updated: April 10. 2009 8:30AM UAE / April 10. 2009 4:30AM GMT

It’s called creative destruction – the phenomenon described by philosophers and economists when, out of the wreckage of a crisis or an economic downturn, older and less efficient ways of doing business become impossible. Value and practicality replace glitz and ostentation. New ideas and approaches emerge.

For those who have lost their jobs, it is difficult to see anything “creative” in this economic environment. The waves of the global financial downturn have been punishing, and there have been few safe harbours to protect consumers. But the sea change created by the global economic crisis is already beginning to be reflected in the country’s demographics and in consumer attitudes, particularly in Dubai. The picture that is beginning to take shape is not entirely negative.

Yes, there have been some layoffs, but the majority of those in the UAE are determined to press on with building a life here. And in fact, this majority now has a chance to seize upon the downturn as an opportunity to create a better life for themselves and their families. As we report today, those who have lived in International City in Dubai are moving to Discovery Gardens. Those who have endured the tortuous trip to and from Sharjah into Dubai every rush hour can now afford accommodation closer to their work and, more importantly, can afford to spend more time living rather than commuting. In some locations, rents have dropped by more than 40 per cent, creating considerably more choice for residents.

As Blair Hagkull, the managing director of Jones Lang Lasalle, an international commercial real-estate firm, tells The National today: “As things become more affordable, people start to have choice, and choice is a very powerful motivator.” But choice cannot just be a motivator for tenants. Developers and property owners must choose to be more responsive to prospective tenants and to those who currently live in their properties who will demand more efficient and effective management and service. No longer do tenants have nowhere else to go.

As prices have dropped, speculators have left the market and now end-users are driving more of the demand in the property sector. Eventually, as more units are occupied by individuals and their families instead of swapped like stocks or bonds, property managers and developers will begin to be held to the standard of the liveability of their properties, rather than just the paper profit they can deliver.

Service fees, sometimes approaching a third of a year’s rent, have already become more difficult for property owners to assess. For its part, Nakheel has begun to renegotiate these fees in some of its projects. Consumers are demanding more rights and at present the market is forcing developers to be more accommodating.

The tide of prosperity may have receded but it will rise again. And when it does, consumer rights and an enforcement of ethical practices in the property market should not be left only to the market to enforce. Certainly, property prices and economic growth will rise and fall – that is the nature of any marketplace. But the institutions that enforce fair-dealing, transparency and accountability must be strengthened so that they will remain in place whatever the state of the economic weather.