Talk of a Dubai real estate bubble could not be further off the mark, says Wahid Attalla, chief executive officer of Spectrum Consultants.
Real estate prices are still cheap compared to other parts of the world, he says. What’s more, the investment return in Dubai is amongst the highest in the region – between 100 and 250 per cent. But this does not mean there are no challenges ahead for the sector, and the head of the Dubai-based property consultancy highlights some of them in this exclusive interview with Emirates Business.
Dubai has many real estate investment companies – what makes you stand out?
We are different in two ways. First, we offer consultancy services to the real estate and tourism sectors, specifically hotels. And second, our services cover a wide spectrum and include whatever investors and owners need from us. We provide expert advice on residential and multi-use real estate, project management, hotels and property in general.
We conduct feasibility and economic planning studies, represent owners and design and manage private real estate and hotel projects. Also our experience has enabled us to get to know the market and understand the nature of investment and the mechanisms that make investment successful. This has helped us to recommend the best projects with the best returns to our customers. We know what the market needs.
What are your current major projects?
We are working on the Bab Al Bahr real estate and tourist development in Ras Al Khaimah, which will be completed in the first quarter of 2010. It will have a four-star hotel with 300 rooms and residential buildings with 710 apartments for freehold ownership.
There will be a large number of facilities such as a beach, swimming pools including one with a café, a health club and 15,000 square metres of shopping space plus an office and retail tower. Investment in this project has been increased from Dh1 billion to Dh1.3bn.
What stage has the construction work reached?
Last month we started laying the foundations while construction of the first phase of apartments will begin in May.
And what else is your company involved with?
We are working with partners in Abu Dhabi on a compound comprising a hotel and apartments. Accor will run the hotel once it is finished. We are studying a number of projects in Dubai that we will announce in due course.
How do you see Dubai’s real estate market at the moment?
Let me make clear something important – there is no such a thing as a bubble in Dubai’s real estate market, whether now or at any time in the future. There are several reasons. The first is the intensive demand for real estate despite the rising levels of rent as well as the availability of finance to meet the needs of many expatriates. Also property prices in Dubai when the freehold phase started several years ago were very low compared to today’s prices or with prices in other parts of the region and the world. Current prices in the UAE in general and Dubai in particular cannot be described as high in comparison with other areas.
Therefore I say the real estate market in the UAE is very far from reaching saturation. Real estate prices started low and continued to rise and they will not stabilise in the foreseeable future, not for at least another five years. The price of real estate has seen corrections – but upwards.
Where do you think the future of real estate investment in Dubai lies?
I believe the focus over the coming period will be on Dubailand and Dubai Sports City, particularly after some projects currently under way are finished. And add to this list Dubai Waterfront and Dubai World Central in Jebel Ali.
Where is real estate investment heading at the moment – towards multi-use properties or hotels?
In fact it is heading for both of these destinations but with a difference. Investment in hotels is strategic and sought-after by investors or companies where a gap between supply and demand has to be closed, as is happening in Abu Dhabi now. But other investors who aim to achieve quick and guaranteed profits are heading for multi-use property since it does not require the same degree of commitment and deep understanding of the nature of hotel work. Also investment in hotels needs a longer time to produce good returns compared to mainstream property where the returns can reach 100 to 250 per cent.
What do you think of the outlook for shares?
Shares have proved to be a big risk as several factors affect prices. Some factors can be foreseen while others cannot. And the shares market is largely linked to rumours and full of speculators who do not have enough awareness to deal with such a complex market.
But speculation also exists in the real estate market.
That is true, but it is a natural and healthy part of the market, especially if the market is in a phase of constant growth.
Does this mean real estate is an investment paradise in the UAE and Dubai?
What I say is that real estate is the best investment in Dubai at the moment. But of course it is not free from challenges, in particular the need for improved infrastructure such as roads and public transport, which should keep pace with expansion in the emirate. This challenge faces not only the real estate sector but also Dubai in general. Lately we have seen some measures taken in this respect and we expect more in the future.
What else would you like to see?
I believe it would be proper for the government, represented by the Lands Department or the tourism authorities, to intervene and establish a legal framework for the time-share industry.
It is expected that a large number of time-share projects will be launched in the next few years but a legislative environment dealing with this type of activity is not yet available in the UAE.
CEO, Spectrum Consultants
Wahid Attalla has more than 30 years of international experience in business. He began his career with Al Futtaim in Dubai after acquiring a BSc in finance.
He then moved to Honeywell where he remained for 14 years, serving in various executive roles in Saudi Arabia, Kuwait, Holland and Singapore. In 1991 he set up a Honeywell office in Istanbul before moving to Cairo and joining the area head office covering the company’s activities in Africa and Asia.
In 1992 Attalla returned to Dubai to become financial director of the World Trade Centre and was soon promoted to general manager. During his 10 years there he played a significant role in planning and directing development of the new centre as we see it today.
Nakheel was Attalla’s next port of call. He joined in 2002 as executive director, commercial and operations, in time to take over responsibility for launching The Palm Jumeirah followed by The Palm Jebel Ali. During his three years with Nakheel the number of development projects the firm was engaged in rose from two when he joined to 25.
“I launched Spectrum Consultants as I want to put the valuable experience I gained back into the marketplace and be able to work closely with developers to assist them realise the maximum potential of their investments,” he said.
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