It is not easy running a real-estate brokerage firm in Dubai these days. But Eon Investments Real Estate,a part of the Saudi Arabia-based Dar Al Salam Holding Group, was established last year at a time when things were particularly difficult — quite a few agencies were either shutting down or seriously considering that option.
Speaking to Property, Harneet Singh, director of Eon Investments Real Estate, recalls that the market was not showing any positive trend when the firm was founded. At the same time, there was speculation that the worst was over. Eon remained upbeat and its assessment of the market turned out to be spot on as the market picked up some activity from the third quarter of 2010.
The firm, which initially focused on the hospitality segment, branched out into brokerage services and is all set to make its foray into asset management soon.
Eon has a team of 11 sales executives and Harneet says the company is currently recruiting more agents.
Eon Investments Real Estate was established when the market conditions were entirely different. Today, your company is going strong. How do you find the market now compared with then?
We started in May last year, at a time when the market was not showing any positive trend. However, the situation has certainly improved today.
There is, of course, a lot of speculation in the market. Every three months a new report is published, predicting the Dubai market is going to fall by another 5 or 10 per cent. I do not disagree with these reports. Nevertheless, we have to take a look at the [underlying] reasons and not just at the surface, as to why the market is declining.
My observations make me believe that the price reductions are limited to only a few areas. Developments such as Downtown, Emirates Living, Arabian Ranches and Palm Jumeirah will not see any kind of reductions in price.
In effect we have actually seen some appreciation in prices in Emirates Living. In the Springs, townhouse prices came down to Dh900,000 during the economic downturn, but now it is difficult to find a townhouse for even Dh1.2 million.
The Emirates Hills villas — with full golf course views — were available for Dh23 million during the downturn, but today nothing is available for less than Dh26 million. These communities have infrastructure in place.
There is huge investor confidence when it comes to areas such as Jumeirah Beach Residences (JBR), Palm Jumeirah, Emirates Living, Arabian Ranches and Downtown Dubai. Certain properties in these areas have appreciated by about 5 to 10 per cent over the past year. There can be a price drop ofabout 20 per cent in areas which are still under construction and are lacking infrastructural support.
As a real-estate agency, which are the areas that you are focusing on?
We have always looked at a few key areas. There are companies that are surviving in this market only because of their focused approach. At the time of conception, our emphasis was only on the prime areas such as Dubai Marina, JBR, Palm Jumeirah, Arabian Ranches and Downtown Dubai.
These areas are still important to Eon. However, we have expanded to other areas such as Motor City, Sports City and Victory Heights, which are gaining momentum and which we feel have better prospects in the days ahead. It is all about infrastructure and the facilities in the area. Motor City and Sports City have got tremendous potential. Silicon Oasis is doing fairly well; especially the villas, and prices are attracting end-users.
Despite some negative publicity Dubai received in the Western press, the emirate's real-estate sector seems to be showing quite a few positive signs. How do you view Dubai as an investment destination?
All our consultants are highly motivated and very positive about the market. We don't just sell properties, we believe in the potential of Dubai. I have been living in Dubai for the last ten years and have seen how it has evolved over the years. Dubai's got immense possibilities because of its infrastructure, which is among the best in the world. The second advantage Dubai enjoys is its central location. The cost involved in operating a business in Dubai is much cheaper than operating from the likes of China, Singapore or the Western world.
Dubai is certainly the business hub for real estate. Moving forward, I believe Dubai will be the place to look out for. The UAE will bid to host the 2024 Olympics, and if this transpires, there will be no looking back.A new boom could be a possibility. It will bring in a lot of foreign investment.
Qatar is witnessing a flurry of activity as it prepares to host the football World Cup. We have a lot of clients who are shifting their bases to Dubai from other countries. A mass of investment is also approaching from India. The Russian investors are rediscovering the Dubai market since the corrected market prices suit their investment notions. Investors who missed the opportunity during the peak are now keen to look at investing in Dubai.
How is the market doing now in terms of prices? If reports are to be believed, prices will continue to drop this year.
As previously mentioned, prices will certainly drop in a few areas which lack good infrastructure, quality and facilities. Still, the property prices in Dubai have not returned to their original prices anywhere.
In the Springs, the original price fora two-bedroom townhouse was approximately Dh450,000, now they are trading at about Dh1.2 million. Even at the peak of recession there was nothing less than Dh900,000. Hence property prices in Dubai did not touch the original prices like they did in Spain, Italy or other parts of Europe. The worst-hit properties are in the US. The [Western] media propagated too much negativity around the Middle East. If the real picture were projected, people would probably realise that Dubai property prices never went back to the original prices they were sold at.
A signature villa in The Palm Jumeirah that was traded for the first time at a very low price, possibly not more than Dh5 million, has since then — barring the phase of dip and correction in prices — gone up to around Dh18 million plus. In fact, a villa was soldfor Dh28 million as per one of the latest reports published.
So basically, what you are saying is Dubai is still an excellent investment for those who have long-term plans?
Absolutely. As a matter of fact, the population in the UAE has increased in past 15 months, predominantly in Dubai. The job market has shown a positive trend compared to the recent past, and the confidence of investorsis increasingly growing,
With the availability of properties at corrected prices and mortgage facilitiesat good rates, you cannot go wrong in investing in Dubai.
As the future business plan of Dubai looks fruitful, it is also possible to expect capital gain on properties in future as compared to other markets. Also, not to forget, history has proved that real estate has always been the best form of investment.
Have you noticed a surge in sales transactions generally over the pastfew months?
Definitely yes, transactions have increased. The painful period was towards the end of 2009 and the beginning of 2010, a time when the number of transactions at the Land Department was in single digits for almost eight to nine months.
It was easy to transfer your property those days. However, now you can't even get an appointment within a week. I hear that the number of transactions now is approximately 40 per day, which gives an immense positive impression as it indicates the market is moving in the right direction.
There are many prospective buyers who are still undecided whether to buy in Dubai. What advice you would you offer them?
I would definitely recommend that investors invest in this market, especially properties that are situated in established locations as previously mentioned.
This is the right time to invest in Dubai as prices will not depreciate further in creditable locations. We are seeing that investors are following this advice and investing in Dubai, and they seem to be very content with their investments.
Dar Al Salam Holding Group is established in Saudi Arabia, aimed at creating an integrated group of companies in the field of tourism, real estate and hospitality.
Nebras International Company, a tourism development firm, is launched by the holding company. It is now one of the leading companies in the sector.
Dar Al Salam ventures into the hospitalitysector with the launchof Dyar Hotels and Resorts in Makkah and Madinah Al Munawarahin Saudi Arabia.
Dar Al Salam establishes an investment and real-estate development arm, Aknan Company, which works in association with major realty firms.
The Saudi-based group sets up Eon Investments and Real Estate, a firm which deals in hospitality and real-estate sectors in Dubai.