x Abu Dhabi, UAE Thursday 20 July 2017

Biggest developers work the room after the gloom

It may have been smaller and less exuberant than past Cityscape conferences, but the property companies still gather to set up their stands for the opening of the annual event.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, centre, with other officials in Dubai after inaugurating the Cityscape Global conference.
Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, centre, with other officials in Dubai after inaugurating the Cityscape Global conference.

Looking around the vast conference hall with its fancy scale models of property developments, Wan Sulaiman threw up his hands. 

"We're here," said Mr Sulaiman, the adviser in charge of the Saudi Arabian-owned developer Tanmiyat. "But where are the investors?"

He was at the annual Cityscape Global conference, which for years has been the place to take the pulse of the property market. But at this year's event there was some question as to whether there was any pulse at all. 

It's sombre," Mr Sulaiman said. "At least it's the bottom of the market. I can't imagine that it will get any worse than this." 

Only two years ago, the conference had a tone of exuberance as developers pulled out all stops to outdo each other and keep the market from spattering.

Meraas Holding unveiled its Dh350 billion (US$95.29bn) Jumeirah Gardens project and Nakheel unveiled a tower that was to be more than 1km tall. 

Not long after the conference prices began dropping and the market came to a standstill and it has not yet seen a revival. 

This year, the most exciting thing happening at the conference was a lone man quietly playing a gold-plated piano near the Meydan stand in a far corner of the centre.

The organiser has renamed the event Cityscape Global to attract international developers from more vibrant property economies such as Egypt and Saudi Arabia. 

But the top official at Cityscape last week admitted the size of the event and the number of its participants had reduced by about a fifth. Alongside an expected influx of more than 9,000 units in Dubai over the next three months, homeowners are simply not convinced it is time to re-enter the market, analysts say. 

Jim O'Hare, the chief executive of Place Strata Management, said it was difficult to understand the need for a flashy property show when there were serious issues in the market.

Mr O'Hare's company provides property management services to building owners and soon to homeowners' associations set up by Dubai's Real Estate Regulatory Agency. 

"Just looking at some of the developers and the cash issues that they are facing, we can say that the market is not in good shape," he said. "It must be really hard for these guys to sell when there is such a backdrop of discontent among owners."

Mr O'Hare pointed to the issues his clients were facing on the Palm Jumeirah, where district cooling fees are extremely high and there are disputes with the developer over elements of projects, such as access to gymnasiums. 

Add this to prices that declined by more than 18 per cent from last year, and as much as 70 per cent in some areas of Dubai since the peak of the market in 2008, and the equation leads to low confidence.

Sentiment towards the Dubai market had improved from last year, according to the property consultancy Jones Lang LaSalle, but still more than half of respondents to a recent survey felt it would take at least two years for a recovery. 

This was "a much longer timeframe than projected in our survey in October 2009". Half of the respondents felt Saudi Arabia was already recovering and a third believed Egypt and the Levant were on the mend.

"The strength of local or end-user demand has again emerged as a key issue for recovery," Jones Lang LaSalle said.