‘Annus Horribilis’ for real estate

Published December 29th, 2009 - 08:58 GMT

2009 has been an ‘Annus Horribilis’ (Latin for horrible year) for most of the global property and real estate world including the UAE, but 2010 will see confidence-boosting consolidation with growth returning by 2011, according to a leading United Arab Emirates developer.

“With the onset of the financial crisis at the close of 2008, many of us in the property and real estate world expected 2009 to be one of the most challenging of modern times. It was certainly that - and then some!” said Mohammed Nimer, CEO of MAG Group Property Development, which is involved in AED3 billion of developments in the UAE.

In a forthright end of year message, Nimer added: “Most striking has been the extent to which 2009 has seen major global corporations taken down in size or even toppled as well as smaller players squeezed out of the market.

“To paraphrase Queen Elizabeth II during the dark days for Britain’s royal family, the past year has been an ‘Annus Horribilis’ for many in the property business who woke up virtually every morning to a new issue.”

It was in 1992, a year of royal divorces and separations as well as the fire that nearly destroyed Winsor Castle, that Queen Elizabeth told her subjects in a TV address that the year was not one “on which I shall look back with undiluted pleasure. In the words of one of my more sympathetic correspondents, it has turned out to be an Annus Horribilis.”

MAG Group Properties is part of the Dubai-based Moafaq Al Gaddah Group of Companies (MAG Group), established in 1978 and now a multinational organisation with 18 offices in eight countries throughout Europe, the Middle East and Asia.

MAG Group Properties has invested in 12 properties at various stages of development across the residential, commercial and industrial sectors. The company was one of the first to create escrow accounts for all projects, before government regulations were introduced and is one of the few developers in the region with ISO 9001 certification.

“It has been a rollercoaster ride for virtually all of 2009, not only in the Gulf but across the globe. However, there is no doubt that the psychological effect of coming to terms with a changed world will no doubt eventually filter through with a positive impact on the property market.

“Personally I believe 2010 will be a year of further consolidation before buyers in significant numbers – particularly from abroad – will be tempted back into the market. We also have to remember that we are currently still living with an oversupply in the market and that will have to work its way through.

“A refreshing change, however, is the way that the business slump which hit us in 2009 is now openly discussed. The UAE was late into the global recession because of an oil price boom supporting the economy when the price of a barrel hit $147 in mid 2008 which led some to believe we were somehow immune.

“Everyone in business will continue to experience challenging times, gradually easing throughout 2010. The market, as it consolidates, will benefit from more traditional and sustained business approaches as opposed to the speculative models that took over in 2007 and 2008 and met their inevitable end in 2009.

“Our own industry example is the welcome return of the traditional business model of marketing completed or near completed new properties which now generate more sales than the speculative off-plan project model.”

“Recognising the extent of a problem is the first stage in solving it and as we work through the coming year and transparency increases. As confidence is regained, the underlying foundations of the excellent business economics of the UAE remain in place for a return to a prosperous and sustainable future by the latter end of 2010 and forward into 2011.”

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