Rising property prices pose threat to trade




Sky high property rental prices are expected to pose the greatest threat to trade among Dubai businesses for the remainder of 2008, Dubai Chambers of Commerce and Industry research has found.


Pessimism for property rentals, as well as for the rising cost of goods, continued to increase from last year, remaining the biggest limiting factor to trade in 2008, according to the chamber’s survey of Dubai traders.


Meanwhile the limiting effect of the city’s traffic problems to the transport of goods has been less reported, the survey revealed.


“In 2007, high property rentals was the biggest identified limiting factor, followed by operating costs, competition, the traffic situation, transport costs and the difficulty in collecting debts,” said Marietta Morada, senior statistical researcher at Dubai Chamber.


“High property rentals is still on top, however high transport costs and high operating costs are also [ranked] pretty high this year,” she added.


Speaking at Dubai Chamber’s Economic Seminar 2008, Morada said the anticipated Dubai Metro and the construction of new highways may have eased concerns over the effect of heavy congestion to their business.


The results also revealed that the major change in traders’ behaviours in 2008 has been a shift from price to better quality of products, with quality and ease of purchase becoming more important factors for traders.


“Although price rise remained to be the main factor for competitiveness, the survey showed significant increase in the number of traders considering competitiveness in product quality, after sale service and advertising,” Dubai Chamber said.


Morada added: “In 2008 there was a shift. There is now a focus on better quality. Price has now become a second consideration. Traders have become more aware of changing customer preferences and are more focused on total customer satisfaction, not only on price. They are now focusing on the other aspects of trading, like making it easy for customers to [make] purchases, inventory management, making sure the goods are always there when demanded, advertising and location.”


According to Dubai Chamber, the same survey in 2007 showed that most traders believed price was where they were most competitive.


The survey – carried out by Dubai Chamber earlier this year – showed an overall positive outlook for 2008, with average overall expectation for the trading sector remaining stable at 6.6 on a scale of 1 to 10, compared to 6.5 last year.


Traders also expected better sales than last year, based on their expectations of rising demand for goods. Sales expectations increased to 56.7 per cent this year, compared to 2007 when 54.2 per cent of traders said they expect their sales to be higher.


“Demand and sales expectations were found to be correlated with employment size, with large firms significantly more upbeat. A change in the outlook of traders for competitiveness has slowly evolved,” Dubai Chamber said.


The results of the survey also highlighted traders’ need for favourable trading regulations and improvement of facilities for trading efficiency, to counter the impact of rising costs of merchandise in the domestic and in the world markets.


“[Traders] look at the government rules and regulations as unfavourable. The data shows unfavourable trading regulations and difficulty in supply procurement as the most common basis for negative expectations,” Morada said.