Transcript
Speaker: Welcome to Dubai Real Estate Club podcast.
Speaker: My guest today is a best-selling author, speaker, associate professor of Dubai Real Estate and received a doctorate degree in property valuation within the Dubai real estate market.
Speaker: He's widely one of the most recognized and sought-after experts in the field, regularly appearing on leading media outlets within the region.
Speaker: He recently published one of the first academic base books on the Dubai real estate market called The Essential Guide to Dubai Real Estate Market, which has received countless plaudits from around the world, from everyday property owners to global experts alike.
Speaker: Ladies and gentlemen, please welcome my desk, Dr. Michael Waters.
Speaker: Welcome.
Speaker: Thank you, Greg.
Speaker: Thank you for that introduction.
Speaker: Well, it's well, well deserved.
Speaker: And we're going to, it's a bit of a special episode, really.
Speaker: So typically on the podcast, listeners will send in questions, we answer them and go into the depth so they get a real life insight into the biorealistic market.
Speaker: However, today, as we've just released this book, I want to delve into each chapter of the book and ask one question around it.
Speaker: because a lot of people listening won't understand or even know this information.
Speaker: And in an industry sometimes where it's difficult to get hold of the trusted information, this is gonna be very, very interesting for them.
Speaker: However, like all good episodes of the Dubai Real Tech Club podcast, we start with quick fire questions, okay?
Speaker: So these are eight quick fire questions, no right or wrong answer.
Speaker: Just whatever comes to head.
Speaker: So what is your favorite restaurant in Dubai?
Speaker: Most recently, Cellevée.
Speaker: Where's that?
Speaker: Sky Address Hotel downtown.
Speaker: Yeah, I like the address.
Speaker: Good.
Speaker: You have to pick one main developer in Dubai to build your dream luxury house.
Speaker: Who do you pick?
Speaker: Ema.
Speaker: Ema.
Speaker: Interesting.
Speaker: Any particular reason?
Speaker: No hesitation.
Speaker: Reputation, build quality.
Speaker: Yeah, good product.
Speaker: Interesting.
Speaker: Describe the Dubai real estate market in one word.
Speaker: Well, it's bubbling hot at the moment.
Speaker: I'll give you two words.
Speaker: Boiling.
Speaker: Scorching.
Speaker: That's fine.
Speaker: Anything that's temperature-wise.
Speaker: Your favourite thing to do slash day out in Dubai when you have a day off?
Speaker: Day off.
Speaker: Probably just a simple beach day with the family.
Speaker: Yeah.
Speaker: Kite Beach.
Speaker: Kite Beach.
Speaker: Yeah, it's one of my favourites.
Speaker: That's my Sunday morning spot.
Speaker: Yeah.
Speaker: Good coffee.
Speaker: Your favourite Dubai area slash community?
Speaker: Hmm.
Speaker: I'm trying to think of something that isn't too close to home.
Speaker: No, no, home ones.
Speaker: Again, probably for the buzz, somewhere like City Walks, quite a nice mix of... Quite underrated as well, especially with... Dubai harbour is quite nice.
Speaker: A few nice places down there are starting to open up.
Speaker: Definitely.
Speaker: The one thing you love about Dubai more than anything else?
Speaker: The weather.
Speaker: Yeah.
Speaker: Especially in the summer.
Speaker: Yeah.
Speaker: Especially now.
Speaker: It's getting hotter.
Speaker: Last two.
Speaker: In your opinion, what's the biggest common myth about Dubai that people have who don't live here?
Speaker: Not so much now, but it used to be, I used to get asked when I went back home, what music do they listen to in Dubai, which I always thought was an odd one.
Speaker: So people always say to me, the first thing is it must be so expensive.
Speaker: And I always say, yeah, it can be.
Speaker: But where I actually live, so I live out in Silicon and mine in my wife's apartment, two beds, same scratch as the one we had in Liverpool city centre.
Speaker: Our cost per living per month is around £800 cheaper.
Speaker: Yeah, probably the mindset is luxurious, high-end, expensive.
Speaker: What is your own Instagram?
Speaker: Yeah, there's a whole mix of lifestyle.
Speaker: That's the one thing I do love about it.
Speaker: There's something for everyone.
Speaker: Yeah.
Speaker: That's how I would describe Dubai.
Speaker: It's something for everyone here.
Speaker: Yeah, that's a better answer than mine.
Speaker: I'll use that next time.
Speaker: So last one, is the Dubai property market a bubble?
Speaker: No.
Speaker: I'll tell you why when we get into those questions.
Speaker: So we're now going to move on to 12 questions.
Speaker: Or if we get through 12, we'll see.
Speaker: But each of these questions for the listeners are based upon this essential guide of the Dubai real estate market.
Speaker: Okay.
Speaker: So I'm just going to ask 12 and we'll have a conversation off each.
Speaker: So question one is how did Dubai become a global real estate market?
Speaker: Okay, so if you try and get into my head a little bit of what I was... So the first chapter of the book was trying to sort of pinpoint the economic forces of how did, as you just said, how did Dubai become this global real estate hub?
Speaker: And I think when you look through that chapter, the fundamentals that have driven Dubai...
Speaker: Obviously, the geographical location is one of them.
Speaker: That hasn't changed and will always be a strong anchor point for why business is set up here, why people choose to live here.
Speaker: The distance, the short distance of access to other global places is such an important factor.
Speaker: I think initially when it was attracting people,
Speaker: expatriate of an expatriate workforce that proximity to other places is important um and so so you've got that you know the free market of the what so you've got kind of those forces you know why do businesses set up in a city uh and and sort of thrive in a city
Speaker: And then I guess if you look at economics and business, you've got the business plan of the government.
Speaker: You know, the branding of Dubai has been fantastic.
Speaker: It's phenomenal.
Speaker: You know, if you think about just one example of Emirates Airlines and its exposure globally, you know, the brands that are coming from Dubai, you kind of they've become global names.
Speaker: So there's that side of things.
Speaker: And then the general governance of how you regulate a city and
Speaker: the vision for Dubai was always to look at other markets and learn from the mistakes, you know, of their planning systems, the things that, I mean, there was big tours where they would look at the cities and say, these are the things that people like about City X or City Y, we want to create that in Dubai.
Speaker: So...
Speaker: I think that that's been a successful measure and I think that's where they're always looking.
Speaker: And sorry, just to finish.
Speaker: Possibly now, you know, there's always that comparison, isn't it?
Speaker: You know, is Dubai, Dubai should be doing this because a more mature market does this.
Speaker: But actually, I think we're probably at a stage where other countries and other cities can learn from what Dubai has achieved and how it's,
Speaker: I think one thing to me is such an attractive place to live because of that.
Speaker: And you saw some of the greatest global leaders of all time.
Speaker: I believe the people who have built Dubai, well, Highness will go down in history as one of the greatest global leaders ever to have lived.
Speaker: Their vision and the way they execute it, the efficiency they do, I think is just, that's one that attracted me here.
Speaker: It's just...
Speaker: you believe it I think you look at other good governments I know we have Dubai it's a bit different in terms of the way it's structured but the UK and the the uproar that sort of stuff and Dubai has ran very very differently but just people here seem to just be on board with how it's going and the vision and it's kind of like a harmony
Speaker: So that first chapter of the book is kind of trying to show the historical development but also look a little bit to the future and see where, of course, 2040 is the new blueprint of what Dubai will look like.
Speaker: I'm sure there'll be another one beyond there.
Speaker: Well, of course there would be, but that gives investors and the real estate stakeholders a lot more confidence when you can start to actually see how the city is going to be mapped out, which...
Speaker: prior to i mean there's there's been six or seven master plans in dubai but um i think more importantly you know we can we've seen it evolve we've seen it it's got to a critical mass now that is attractive and and again we hear time and time again about how how great the city is and the diversity of of housing choice the diversity of places to go um the diversity of the people in the city they're all big
Speaker: you know draws to multinational companies that need all of those things to to work for their talent pool i would say you've got everything in one place yeah plus more i completely agree so uh what is the current dubai and uae property market performance and some of the key characteristics around that
Speaker: Yeah, so again, moving through the discussion, it was kind of thinking, just mapping out what is the Dubai real estate comprising, where's the investment activity and the weighting of that predominantly being on the residential market versus the commercial market and then discussing...
Speaker: factors as to why that residential sector of the market has been so popular and the challenges and the opportunities that exist within within the commercial settings so that obviously that's been cyclical like any any real estate market we're kind of entering the third real estate cycle in Dubai
Speaker: the upside of that cycle so the two previous cycles have been fairly did have been fairly different the first one was very speculative led you know any new market you're testing price points you're testing product you can have different types of investment mentalities you know the developers in the second cycle really anchored into affordability and building the city and
Speaker: as affordable for families and so on and perhaps looking back that was rather oversupplied and that led to a bit of a slump for a few years and of course overshot a little bit more with what we all lived through with the pandemic and so on.
Speaker: Again, normally these cycles and the downsides are triggered by something that's not on our radar, it's something fairly sharp and fierce.
Speaker: I think the third cycle is building is going to be built off the value.
Speaker: So Dubai, I think, is still a fairly undervalued real estate market and it's also serviced much better with data.
Speaker: So when you've got more data, you're going to get
Speaker: much more informed decision decisions and and people you're going to be less you're going to be pricing in less risk yeah into that because you've got you know 15 15 years of good transactional data behind that decision that's obviously earlier in the cycle you you had to kind of guesstimate or yeah take a pun or
Speaker: That was one of the things that did surprise me.
Speaker: Positive was a good thing was the amount of data, transactional data you have available to, you know, look at other markets.
Speaker: It's...
Speaker: sometimes not available, hidden, very difficult to access, even if you can't access it at all.
Speaker: And I think that's also maybe a key characteristic and why Dubai is so popular with investors is when you're making an investment, you, yes, there's emotion involved because, but you look at the numbers, you know, and you have actual numbers there to look at when presented in the right way, of course.
Speaker: Yeah.
Speaker: And I think the secondary portals or the portals that exist that take the raw transactional data from DLD, they're also offering the public and investors and clients much more targeted information.
Speaker: So we can start to look at things like total returns, income returns, capital gain, as we would in other markets.
Speaker: So we can start to make that comparative view on how the real estate market's performed for investors.
Speaker: And equally, again, another example with the data that I can look at transactions today that were done yesterday,
Speaker: In the UK, you're waiting a few months.
Speaker: So it's caught up and overtaken some of the challenges historically.
Speaker: So as I said, I think in this third cycle, and I think what we're starting to see play out is Dubai is undervalued and now I've got better data.
Speaker: I don't need to be so concerned about the volatility and the risk.
Speaker: Transparency.
Speaker: Transparency will drive the prices to be more...
Speaker: international if we want to call it and to tie that back to the question I asked before in terms of you know how to buy looks at other markets presume that's probably a thing that they did look at another racing markets and go hang on a minute that's potentially a downside an issue let's make it better
Speaker: Yeah, and the government have been receptive to outside information.
Speaker: So one example in the transparency area is JLL.
Speaker: JLL do a global transparency index every two years and since 2004, clearly I've put it in the book, but since 2004 they measure global markets and the Dubai government have listened to the...
Speaker: to those milestones and they've addressed the challenges to move from an opaque to a semi-transparent to a transparent market in a relatively short amount of time through the portals, through the open data.
Speaker: So again, a government that's receptive and listening to how can we make this a better
Speaker: real estate market how can we govern it how can we regulate it how can we attract more interest yeah you know that's been very receptive so again it just ties in with that first part of having an open-minded government yeah it's really important I think
Speaker: Definitely.
Speaker: Yeah, no, for sure.
Speaker: So third question is, talk me through the Dubai residential property cycle because you did touch on it then.
Speaker: So maybe just talk about it in a bit more depth and some dates as well because a lot of listeners might say, actually, do you know what?
Speaker: Yeah, I bought on that cycle.
Speaker: I bought
Speaker: Yeah, I lost that cycle.
Speaker: So, yeah.
Speaker: So the cycles, as you said, the cycles that I spoke about predominantly on the residential side, we've only just started to really measure the commercial property cycle since the last five or six years.
Speaker: It's a fairly infantile amount of data.
Speaker: But the residential market is the one that catches the headlines.
Speaker: It's the one that we talk about more socially.
Speaker: And certainly I get asked, and I'm sure you do, a lot of questions about where is it going.
Speaker: So the first cycle, I mean, the real pinching point and one of the motivations for putting the book together is, you know, we've got a 20 year history since foreign nationals have been permitted to buy
Speaker: real estate here so from you know from 2003 4 or 2002 3 and 4 that was the um you know that was the real that was the real starting point for foreign investors here yeah um and the run-up in that in that first cycle was sharp and fast you know there was a lot of excitement and a lot of um aspiration built into the into the market
Speaker: we don't know what it would have looked like if we didn't have the financial crisis but but we did have the financial crisis yeah and that shook shook the market like it did like any any of the other global real estate markets um but recovered quite quickly so towards the end of 2010 early 2011 is when you started to see um renewed confidence there were some things that were
Speaker: know established and sorted out and smoothed out regionally which again sort of anchor points to that resurgence uh and so from 2011 up until sort of 2014 again a fairly sharp and quick increase so we've kind of seen a similar pattern recently where we have this fall we have this economic shock although the one was financial and one was more uh
Speaker: Well, health-based, but there was an unexpected thing.
Speaker: It was more of a government-led lockdown.
Speaker: It wasn't economic slump or financial risk.
Speaker: So there was these things that kind of triggered that and then bouncing back up.
Speaker: So sometimes when we look at the market, we anchor ourselves to it's grown 35% and we don't take a wide lens, look at the market and say, actually,
Speaker: we had a couple of years of uncertainty caused by factor x and and actually the growth rate's quite steady and stable so people who you know when we hear it's gone up 35 percent it can't can't go up any more than that yeah you sort of think it's a bubble you see then you start having the conversation yeah yeah is it a bubble um so i get asked that on a daily basis
Speaker: So we kind of, you know, we kind of get that.
Speaker: That's kind of, again, because we didn't have the data to inform and to see it was hard to evaluate.
Speaker: And the expo, again, was a big impetus in the market.
Speaker: So towards the end of 2013, that was announced and Dubai was going to be the place where the whole world was going to come and fall in love with Dubai.
Speaker: And like with any announcement like that, although it wasn't on the same scale as other mega events, it has an impact on people's behavior.
Speaker: And there was a lot of confidence in the market.
Speaker: What called the market off because the government didn't want things to be as...
Speaker: wild west as as an unregulated market was the you know the mortgage caps that came in and the doubling of the transfer fees that happened around that time to call any speculation in the market because the market was getting carried away with itself
Speaker: that's a that's that's kind of a hurdle to get over if you want to buy real estate but it also it also protects there's a protection element to that from the central bank so you know you don't want to be in markets where you know you're putting five percent deposits prices are wildly increasing and then you know you lose you lose out because you got into the game late in the day so by putting down
Speaker: a bit of equity in the market or more equity than other markets, there's a bit of a stabilisation effect with that policy.
Speaker: So I don't think that triggered the slowdown.
Speaker: I think it was more to do with there was some economic issues, there was a period of oversupply.
Speaker: So again, in those first two cycles, because the city has to grow, it has to get to a critical mass,
Speaker: it had population aspirations as it does now, there's a fierce amount of building that goes on to create a city, doesn't it?
Speaker: Especially from scratch in the desert.
Speaker: You're going to get oversupply.
Speaker: So obviously at periods of time, that oversupply means prices slump.
Speaker: People have cheaper rents.
Speaker: It's more affordable.
Speaker: And then once that gets absorbed, you enter another site.
Speaker: I was having a conversation with a landlord who brought in Alpha Jan.
Speaker: Three properties in Alpha Jan in 07 at the peak before the awake crisis.
Speaker: And he brought in 42 as well, didn't he?
Speaker: Yep, he did.
Speaker: When did he buy next?
Speaker: I know, I know.
Speaker: And he said, I've...
Speaker: So he's got a mortgage on all three of them.
Speaker: And he said he's literally just been paying off interest for since 2007.
Speaker: Yeah, okay.
Speaker: And he's obviously now selling, but he's selling at a decent loss.
Speaker: Oh, okay.
Speaker: Still a loss.
Speaker: Yeah, still a loss.
Speaker: In that area, I know other areas to buy may vary.
Speaker: And he was just like, I've just...
Speaker: So that's where I started to understand, like obviously speaking about cycles, but actually seeing, having a conversation with someone about who's bought in the cycle at the worst time.
Speaker: Yeah.
Speaker: Yeah.
Speaker: It's a good sort of anchor point to have and find out when he's buying next.
Speaker: Let us know.
Speaker: And ask him personally.
Speaker: No, I think, yeah.
Speaker: So then, you know, then there was a much steadier decline.
Speaker: So from top of 2014, uh,
Speaker: I think it got extended a bit with the pandemic.
Speaker: I think Dubai would have come at it a bit more.
Speaker: And people were kind of asking the question, what's Expo going to do?
Speaker: It's not changed the market.
Speaker: That's how I first heard about Dubai was Expo.
Speaker: Yeah, so often at the announcement you get euphoria, but it's the biggest price gains are at the end.
Speaker: So there's, again, data in the book about that fact.
Speaker: So it's looked at previous expos, it's measured.
Speaker: the importance of the announcement of an ex particularly in these young cities and the fact that hosting something like the expo is hugely beneficial for just urban planning and again building new districts and not just attracting investment
Speaker: and you know post post the expo is or is where you most likely see most of the price growth and I mean it's not just down to one factor but of course if you if you look back and you saw but we've kind of seen that haven't we with with what's happened here
Speaker: Very interesting.
Speaker: Next question is for investors, which a lot of people who listen to this and I speak to now as we call for are investor based.
Speaker: I guess investor based also any end user is also an investor because they obviously want to increase the equity and value of the property.
Speaker: but how might investment in Dubai property diversify their portfolio and what are some of the key drivers for investors this is more I guess people who might have already have a place in Dubai or maybe somewhere else in the world and they're doing it purely for investment terms yeah I put this chapter together at the end of residential to kind of because again it
Speaker: there's a lot of information or there's a lot of discussion.
Speaker: I don't know how far these discussions go.
Speaker: I sometimes answer questions and walk away.
Speaker: I never find out what people have done with that information.
Speaker: But I wanted to put a chapter together that kind of looked at that objectively, looked at the fact that
Speaker: what are the credible benefits of investing in Dubai if you want to diversify?
Speaker: Because of course, I think when I first came here, it was very much the mindset was a home bias.
Speaker: I'll work here, I'll send some money home, I'll save a deposit for a house, whatever the reason it was.
Speaker: I don't think it was just the circle of friends that I had.
Speaker: I think that was generally... People didn't see it as home.
Speaker: Yeah, so it was very much the attention was on the home country and kind of fast forward the saving to get a deposit in the home market, I think would be a fair generalisation.
Speaker: obviously the the issue when you do that if you if you know again if I if I keep with our home country you know the UK market you've got you've got various things that can can go wrong if you put all your money in in one market like the currency like the performance of the the real estate market although the UK has been doing well the purchasing power to buy internationally is being completely forgone with the currency issues so there's various
Speaker: rational reasons for why you'd want to, as an expat who perhaps doesn't know where their final, I don't mean, I don't mean where they're going to die.
Speaker: I just think their final destination is going to be.
Speaker: I mean, that's a shame.
Speaker: Me and my wife are here.
Speaker: We've moved here.
Speaker: I can't see us leaving for years and years and years.
Speaker: Yeah.
Speaker: But everyone I speak to, I was in a conversation last night, we ran out for dinner, and he said the same thing.
Speaker: He said, oh, I might end up in Croatia.
Speaker: Everyone seems to love Dubai, but I will end up at the end.
Speaker: But maybe that's something that will change.
Speaker: It's a dollar-denominated currency you're investing, isn't it?
Speaker: The dirham is pegged to the dollar.
Speaker: So you've got that.
Speaker: That's a...
Speaker: a fairly strong currency to be investing and having support.
Speaker: You know, you're investing into the fact that Dubai is a growing economy and maybe the shift of economic power is going to be moving more towards the Middle East, away from Europe.
Speaker: And therefore, if you have got all your equity in a more traditional location, you're missing out on the growth and development that new markets offer.
Speaker: um of course real estate you can't diversify it very well like we can in in stocks and bonds because you need to be super rich and super wealthy to do that but um there are mechanisms now particularly for younger uh well our generation still i'm not that old but younger investors who want to kind of enter dubai there's yeah you can buy fractional uh
Speaker: stakes in in in real estate so you can buy with as little as 500 dirhams or a thousand dirhams yeah it's not going to make you super rich but it gives you an exposure to a new market you can kind of enter that test the water and perhaps use that vehicle to save for the deposit to buy your first investment or something
Speaker: like that um you know DLD has the fractional title deed you know four people could can invest here so there are more affordable ways so one of the you know the chapter started off by saying let's get over the affordability issue of Dubai you know this is kind of if you if you want to invest here these are some numbers are behind you know how much you need to put aside that you know the propensity to save I know it sounds boring but if you want to achieve uh
Speaker: a bit of financial leverage ourselves.
Speaker: We've got to sacrifice a bit of our income today to invest in the future.
Speaker: So it's looking at that element.
Speaker: But also I looked at some key communities, Business Bay, JVC, downtown, Palm Jumeirah, to see how it performed over as far back as I could go, which was sort of 10 good years of price performance at 2012 to 2022.
Speaker: How would that have compared as a price performance
Speaker: gain versus other more typical expat investments you know stocks and bonds ETFs that kind of thing so there was an outperformance in some of those stronger communities over that period of time but as I've just explained you're kind of you know bottom and top of the market yeah with that analysis so
Speaker: I think the chapter doesn't try and say like every time you buy here you're going to do well.
Speaker: It just picks up on the essence of, you know, spread your bets.
Speaker: Dubai's got a great business plan behind it.
Speaker: If you are an expat here with a medium to long term vision, you'd probably do quite well.
Speaker: Definitely.
Speaker: Just having something.
Speaker: Basic investor principles when I've got investments.
Speaker: I'm sure you have.
Speaker: I am diversified.
Speaker: And it's having those basic principles of not just looking at short-term gains, but 5, 10, 15 years.
Speaker: And I know for me, again, we're probably both biased being in Dubai.
Speaker: But if you look at the data in the book that you've written,
Speaker: Again, it depends on the area, but I just can't see.
Speaker: So with rents and the price gain over 14 or 15 years, it's a long-term sort of annualised 11% or 11.5% return on your money.
Speaker: So if you've got the emotional, like any investment, if you've got the emotional control and the discipline and the plan to say, this is why I'm going to invest here,
Speaker: Often people ask, should I buy?
Speaker: They're trying to think, oh, if someone's made 30%, I should have bought because I would have made 30%.
Speaker: It's not the right headspace.
Speaker: You've got to go and say, look.
Speaker: Rational.
Speaker: Rational thing.
Speaker: This is how much we can afford.
Speaker: This is what we might go for.
Speaker: And it might be that you start off fairly low.
Speaker: and have a small investment property and that offsets some of your other investments elsewhere i mean it does it is all situations yeah they're different but those basic principles still apply i think people think to buy something is this like obviously it's an amazing and an incredibly growing place but there's the basic fundamentals of investment still apply yeah 100 yeah
Speaker: Great.
Speaker: So next one is I want to go in.
Speaker: Yeah.
Speaker: So I kind of this is one thing I want to cover is the professional practices of real estate in Dubai currently, which you cover in chapter six.
Speaker: How do you view the current state of the professional world of broker slash brokerages in Dubai at the moment?
Speaker: OK, no, I think, yeah, so the professional practices element of the book was to focus in on some key parts of, you know, the regulation in the market and the fact that there's still audiences of people that are unfamiliar with, you know, leasing practices and buying and selling.
Speaker: So, again, it was laying the foundations to all of that.
Speaker: I think, again, it all comes back to regulation and controlling industries and building confidence.
Speaker: And, you know, the, you know, the brokerage licensing that's obviously been established is one is one way to do that.
Speaker: And I think, you know, unfortunately, as an industry, it's and this one, you know, governments can't do a lot about it.
Speaker: It's just the nature of.
Speaker: the profession is you know it's a fairly low barrier to entry industry in the sense of yeah as we see now people are turning from different skill sets industries jobs and they want to become real estate brokers because that's where some of the money I've heard so you know that means that there's a lot of competition but I you know
Speaker: You kind of would then offset that with the fact that there are some... It takes time, like it does in any market, to build up a good client base, a loyal client base, build trust, build a reputation.
Speaker: And possibly if someone analyzed the top...
Speaker: the top number of transactions per brokerage, you know, it's going to be lopsided, isn't it?
Speaker: It's not going to be, it's not evenly distributed across the 3,000 brokers that are all in Dubai.
Speaker: So I think that, yeah, I think they're doing as much as they can.
Speaker: There's got to have regulation.
Speaker: There's got to be sort of a code of ethics.
Speaker: But customers, these, you know, they're all kind of waking up to the fact that, you know, I can get data, right?
Speaker: They've got more control.
Speaker: Yeah, especially compared to other markets, which I think is right.
Speaker: They should be making informed decisions not based upon just one broker's word or a broker's word.
Speaker: They should be able to see the data because it's their money.
Speaker: Yes, you want to trust the person you're working with and that's fundamental.
Speaker: But yeah, they should be able to... But most people's experience in the real estate industry is the interaction they have with brokers.
Speaker: So it's kind of... They're the first protocol.
Speaker: The first part of the... So having that trust and having those qualification courses and having brokers up to speed with what the current legislations are so that they could advise customers is good.
Speaker: Yeah.
Speaker: So, yeah, I mean, I think it's like any industry.
Speaker: And now we're starting to see brokers wanting to differentiate themselves.
Speaker: So if you look at, you know, how do you get competitive?
Speaker: Doing podcasts.
Speaker: You know, how do you get competitive advantage?
Speaker: How are you differentiating yourself?
Speaker: How are you building those longer term relationships?
Speaker: And I think, yeah, there's certainly more to be done in...
Speaker: in any industry so real estate agencies is no different but I think yeah how the agents are developing their own business models as well as the regulation I think is improved vastly since definitely it's always evolving I mean look what we're doing now you know I don't know five years ago like would this have been a thing
Speaker: I don't know I'm sure there are one or two in the market but you know it's building it's building the trust and giving the value so they feel that they can trust you just beyond the commission check and that's kind of what I when I speak to clients like yeah I you know I want to have your best interest at heart always first and
Speaker: If that happens, typically, I don't know, just not as in real estate, but just in any industry, if you do the right thing over a long enough period of time, it compounds and good comes back to you, whether that's financially fulfilling, whatever that is.
Speaker: Yeah.
Speaker: Yeah.
Speaker: So I think we're definitely on the same page,
Speaker: But the, you know, so the agency and brokerage is one side, then there's the valuation.
Speaker: You know, how is that market regulated?
Speaker: How do we even look at the different assets here?
Speaker: Some elements on commercial practices as well.
Speaker: So a whole range of different fields to cover, but trying to pick up on them.
Speaker: The more interesting one.
Speaker: No, it's really, it's fascinating because it's not just opinion.
Speaker: This is what I was saying to people when I was showing the book.
Speaker: You can see the physical days and that's why it's so good for end users to pick up this book and read it as well just because it's almost, it is a textbook.
Speaker: It's like when I need to know something now, I'm referring back to this book.
Speaker: That's,
Speaker: I don't know how you designed it to be used, but that's how I've used it even over the last few weeks.
Speaker: Yeah, I mean, I think I tried to get, you know, there was, so I've, you know, I've been teaching in an academic institution since I came here in 2009, as well as, you know, having conversations with sort of the graduate level surveyors.
Speaker: So you kind of get an idea from their perspective, you know,
Speaker: And there was an audience there that wanted to know more.
Speaker: You've got graduates still coming from other markets and getting jobs here who aren't up to speed with everything.
Speaker: But also just a master's program or a university degree isn't for everyone.
Speaker: And if you wanted to find out more about Dubai real estate, you should be able to just have something
Speaker: available so that was one of the motivations you know for the agents to have a bit of a working manual you can call it what you want manual bible so yeah so that was that and then the investors you know those people that said should I buy here should you know just there's the information I'm not again there's a disclaimer in there about whatever financial decisions you made by reading this book you are you are yeah but um
Speaker: Yeah, I think there's a lot of misconceptions.
Speaker: So, you know, what is the price?
Speaker: So away from the headlines, you know, how has Dubai done as a city if you'd have invested?
Speaker: So I spoke a little bit about, you know, the 11.5%, but the price swings aren't as... Obviously, the growth over the long term is much more subdued around sort of 3% or 4%, which is more, you know, again, it's taking it at a mean average, but it's more...
Speaker: that's how you should look at the market.
Speaker: Definitely.
Speaker: You know, don't buy it thinking next year it's going to be 20% or 30% because you're just going to be disappointed.
Speaker: Comes out to the basic principles also that we said.
Speaker: I mean, if it goes up 20%, well done.
Speaker: Plan for less.
Speaker: Yeah, yeah.
Speaker: Anything else is a bonus.
Speaker: Yeah.
Speaker: So number seven, are you better to own or lease in the Dubai property market at the moment?
Speaker: And what's the upside and downside of both?
Speaker: Okay.
Speaker: I presented this kind of analysis more on the commercial because I wanted to move away from just talking presidential all the time.
Speaker: Um,
Speaker: I haven't got, you know, again, I look at it as an appraisal.
Speaker: I look at it, you know, and again, it's with the best intentions in the world to map out and say you're better off.
Speaker: Of course.
Speaker: Yeah.
Speaker: You know, buying today or renting.
Speaker: It's case by case.
Speaker: You're taking current information that may not materialize in the future.
Speaker: But I think, again, long term or even moderate term,
Speaker: you're better off buying.
Speaker: It doesn't take that many... In the early years, when you could get a return, an income return of about 10%, you're not waiting that long to get your money back, even if things went wrong.
Speaker: And if things did better, you've even shorter windows.
Speaker: So probably people who are buying in the early years, they're getting high 15%, 16% returns if they've kept those investments and haven't cashed out.
Speaker: They're good solid reasons.
Speaker: I mean, again, I've said on other podcasts, I look at things a bit more from a utility perspective.
Speaker: That's why I find it, because most of the time on a database, I don't really enjoy
Speaker: Yeah.
Speaker: So I don't try... It's different perspectives.
Speaker: It's an opportunity.
Speaker: What you're not paying... What you're paying on a mortgage can be fairly fixed, although rates move and mortgages move.
Speaker: You're fixing your future costs.
Speaker: That was a motivation for entering the market in the first place, is that I can fix my costs.
Speaker: And if the market goes as wild as what it was before...
Speaker: I'm okay.
Speaker: And again, that's a utility.
Speaker: I'm not looking at, you know, and then I'm getting the, you know, I'm getting the location that I want to live in and I'm also fixing that.
Speaker: There's more elements to it than just, you know, especially if it's your family home and other conversation on the episode one with Connor from the mortgage and he was saying, one question I put to him was someone sent in was about, are mortgage rates going to drop?
Speaker: Well, that sort of stuff.
Speaker: It's like, if it's your family home, it's like, it's more than just the, yes, you want it to be a good investor, obviously, but,
Speaker: It's more than just the money as well.
Speaker: If that's where you're going to stay for 10 or 15 years, like none of us know how long we're going to... They tend not to make the best investments your home because the motivations are different.
Speaker: It's different.
Speaker: The KPIs that we're measuring it on are completely different.
Speaker: Yeah, it's more emotional.
Speaker: Yeah.
Speaker: So you're buying it for various other factors that may or may not be financially as sensible as buying for the highest return on your capital and so on.
Speaker: So...
Speaker: I always advocate, but if you can buy and you want to be here and you feel this is somewhere that you'd want to be placed and invest, then of course buying does make more sense.
Speaker: I agree.
Speaker: Rent is kind of like lost money at the end of that.
Speaker: That's how I was always taught as a kid.
Speaker: Even with that saying, renting again, burning money, there's a place to do it.
Speaker: You're not even going to afford to buy.
Speaker: yeah but i think i think it's buying buying with buying with a plan and but i'm buying you know sense sensibly and not obviously yeah you know buying something that is is kind of comes back to the principles again we again yeah same principles of you know invest start off like don't go all in yeah to begin with you know see how it works as an investment
Speaker: You know, I've met people that are knowledgeable and educated.
Speaker: You know, they've bought one year, they've sold within 18 months.
Speaker: And I'm like, surely you can't have.
Speaker: And this isn't on the high end.
Speaker: This isn't on the increase.
Speaker: This is on the fall.
Speaker: So I'm like, surely that...
Speaker: Surely the reason why you bought 18 months ago hasn't materially changed for you to just sell.
Speaker: So again, if you don't have a plan to anything, it unravels.
Speaker: And I think that's what happens with any investment, doesn't it?
Speaker: There's a whole series of things I could rattle off where people have bought just because they wanted to get it.
Speaker: But yeah, I think buying works, there's a few sort of basic appraisals to that.
Speaker: Renting also works.
Speaker: I mean, renting is a good option if you want to obviously keep flexible.
Speaker: Of course.
Speaker: You want you don't you want to try an area.
Speaker: You know, you don't want to be buying straight away, do you?
Speaker: Because you don't know what that area is.
Speaker: So there's various reasons why you would want to rent as well.
Speaker: It's again, it's personal to the different circumstances that people are in.
Speaker: Definitely, completely agree.
Speaker: So you mentioned property valuations.
Speaker: So what are some of the key differences in valuing property in Dubai compared to other international markets?
Speaker: Okay, I'm going to turn the question to start off with the similarities.
Speaker: I'm going to answer the questions I want to answer.
Speaker: No, I mean, the methods are the same.
Speaker: There's five key methods to valuing all real estate, whether that's residential or commercial and industrial.
Speaker: And obviously the most common one that you and I would sort of face would be, you know, the comparative method and the investment method.
Speaker: So looking at transactions and looking at
Speaker: prices that other people have paid historically and and that's how value was the kind of looking at things so now we've got better data sets then you know that whole process is fairly similar to other markets early on in the development of to buy you know value has had to make a lot of assumptions and
Speaker: do a lot of legwork to find qualified information behind their assumptions in their valuation reports.
Speaker: I mean, even the book starts to look at the future of valuation, you know, the fact that we're probably at a point now where we can have...
Speaker: some level of autonomous valuations here so that you know all the risk elements of the banks take on when they value you know the villas and the flats that people leverage on can be done behind the scenes and they can click a button and see where that exposure is and hopefully that leads to better product for customers so when the risk is compressed because
Speaker: we've got a longer track record and we've got better data then normally well I would hope that there's a more diversity in in the products that we can get offered as customers whether that's first-time buyers or end users yeah we start to see segregation in the in the way in which banks are classifying different customers which
Speaker: we don't see we haven't seen so much of that and you mentioned the five things when value and i get five methods yeah i mean i've i've i've read the book so just for the listeners just quickly rattle off the five well there's the comparative so there's the comparative method which is you know based on what i said you know someone's paid two million last week for the same unit so logic would prevail that it's two million
Speaker: The investment method is based off a cash flow.
Speaker: So it's more for like single owned buildings or commercial entities, industrial units and so on where there's a lease in place, a longer term lease, a commercial agreement that says this is how much we're going to receive on this income.
Speaker: And then investors come along and say, okay,
Speaker: This is the type of return I want on that.
Speaker: This is how I see the risk.
Speaker: So I'm willing to pay this much for that property.
Speaker: So there's the relationship between rent, yield and capital value.
Speaker: Then you have the residual method, which is a method that is for valuing land.
Speaker: So land and development opportunities.
Speaker: Again, we can cross check it with the comparative method, but principally there's a method there whereby you're kind of looking at what the building is going to be worth in the future, how much it's going to cost to build it, and then a bid on developer's profit, and then
Speaker: you know what whatever's left the residual balance is essentially the land value or the or a likely land value an estimate of the land price then we have the profit method which is more of a revenue based assessment of of the property so things around us the hotels the leisure you know the sports arenas the cinemas
Speaker: even petrol stations and so on would be valued using a profit method schools right yeah the schools are private aren't they yeah so schools would be another example um and then the last one is is the cost method so of course cost and value aren't aligned in in most in most instances but some assets that exist like government-owned buildings or religious buildings
Speaker: we're not trading them they don't we don't we don't have an income off them so to speak they more they have more social value but we need to put a a value on there we'd use the cost method which is you know land plus build cost plus depreciation because the building's older
Speaker: Yeah.
Speaker: In a very quick and... No, no, again... They're the five methods of... I know there's a lot more that goes into that.
Speaker: It's just quite good to get in there in a brief... Yeah, so that's how we differentiate those valuation methods.
Speaker: The PhD that I did, I mean, in the introduction, you said I'd got a doctorate in property valuation.
Speaker: Yeah.
Speaker: Which is true, you're not lying.
Speaker: But the study was looking at how the variation between valuers in the commercial property sector here, are they faced with the challenge of other values more varied or wider in a market like Dubai versus a more mature market where you've got better data and better transparency?
Speaker: And what would create those differences?
Speaker: So that study tried to examine at the time, it was sort of between 2015 to 2018 or 19.
Speaker: So it was a fairly well established property data market, but not as good as it is today.
Speaker: So it was starting to get a bit of discussion behind those things.
Speaker: I like those five.
Speaker: That's one thing I was noting down as well.
Speaker: That's part of what I do.
Speaker: I knew I'll see elements of them, but seeing them written down in that form was really, really good.
Speaker: The last question we're going to have time for.
Speaker: And I want to talk about the future of Dubai, which you speak about towards the end.
Speaker: And I think it's very important for people who are, A, like me, looking to stay here long term, but also from an investment perspective, those people who have the right principles in place, who understand the medium for long term gains.
Speaker: So let's talk about Dubai as a futuristic smart city.
Speaker: Okay.
Speaker: Where do you see this place developing real estate wise over these next 50 years?
Speaker: I know you don't have a crystal ball based upon historic days that you've done this but where do you see yeah I tried yeah I tried as you say the final two chapters are like future directions I think I termed it so you know what's gonna be how is Dubai gonna evolve further in the future so there was two main forces there's sustainability which you you could kind of link into the smart city yeah element as well and then also the development of smart Dubai so
Speaker: um in terms of i mean just very quickly on the sustainability side of things you know dubai is a fairly young city as i mean we've established its growth and development is is a much shorter history than many of the countries that yeah well other countries yeah especially the one that we're from um the evolution on sustainability the opportunity is that there's an esg compliant uh
Speaker: mandate globally and of course Dubai has an opportunity because it doesn't have to deal with the retrofitting problem that many other markets have.
Speaker: Things like ICD, Brookfield Place, a good example of a well thought out and well planned commercial tower that has attracted the best multinational tenants.
Speaker: They're going to be the investment product.
Speaker: that institutional money internationally will want to to buy into in the future so it's likely to see that the green agenda sustainability you know lead platinum well certified buildings will be what those institutions are hunting in in markets like Dubai because of course linking back to one of those valuation methods everything is cash flow plus the risk premium and they're like that's likely to be
Speaker: and more favored if if we've got the buildings that companies want to occupy because this is the same because I my parents came out to the first time the last people you ever expect to visit Dubai okay the way and then my mom she's very big on nature and sustainability your friend yeah that sort of stuff
Speaker: and her perception was Dubai, what are they doing for sustaining, what are they cycling, that sort of stuff.
Speaker: And it made me research a lot more.
Speaker: And even I living here didn't realize how,
Speaker: I'd say far ahead because everyone's trying to get there.
Speaker: Obviously, people move different ways, but how the plan for it and what they already have in place, I didn't appreciate even living here.
Speaker: So just last few minutes, maybe just touch on a few of what Dubai is actually doing, sustainability.
Speaker: It's very important.
Speaker: Well, a lot of the... I mean, recently, last week, you know, about the beaches, the public beaches, you know, the spaces that are being opened up for...
Speaker: for the residents and the social spaces and the amount of green spaces that are planned for here are important.
Speaker: I mean, I think the sunshine and the blue sky helps with a backdrop of green.
Speaker: I think it's the perfect formula.
Speaker: So you need more green space in cities.
Speaker: People are receptive to green space.
Speaker: It makes people happier, apparently.
Speaker: I'll try.
Speaker: I'll try.
Speaker: But yeah, so those things are all valid reasons, you know, bringing, having more social infrastructure again.
Speaker: And, you know, the way in which we move around the city is different to other cities because of the climate.
Speaker: but it's all planning in a, you know, again, having the city mapped out in its zone so that we're not building too sparse.
Speaker: A lot of people say there's so much desert around.
Speaker: Well, there is, but we're not building that desert at the moment.
Speaker: We're trying to keep things within a,
Speaker: in a fair distance and i think you know the 15 minute city concept is is where most again smart cities are trying to adhere to that you don't need to go further than 15 minutes to to get everything that you need in your life which again isn't isn't too far off in most of the the fact that dubai is sort of polycentric there isn't a one core city center there's
Speaker: multiple nodes that's the thing people there isn't really a people maybe class the marina you know the the palm is the they're the tourist hot spots downtown but it's not a and even with the communities like sample said i live out in silicon moving five minute walk of our apartment block
Speaker: everything I can eat, got restaurants, Mao, petrol station, like everything and that content I've seen replicated and obviously being a broker you see lots of areas of the eye I can see how that's been replicated it's very smart and I think it's also the fact that you know the digital technology
Speaker: breaks down that traditional travel problem that most cities face.
Speaker: And if you take that on a global level, which I think we have to view it more global now, is attracting that talent to come to Dubai.
Speaker: So keeping your eye on chapter one, you know,
Speaker: how did Dubai become such a focal point for global real estate through economic diversification and then chapter 12 finishes off by trying to see what is the government doing to sustain that and move that I wouldn't say not exponentially but at an even faster pace and the digital connectivity with Dubai and the
Speaker: Even the trading of real estate and doing things, you know, the ease of the transaction and, you know, dealing with that side of things.
Speaker: They're all going to be things that Dubai want to pioneer.
Speaker: It all feeds back into one.
Speaker: It's been an absolutely fascinating conversation.
Speaker: I've learned a ton.
Speaker: Obviously, I've read most of that.
Speaker: I've learned an absolutely tonne.
Speaker: But for the listeners, before we leave today, where can they find you?
Speaker: Where's best to connect with you?
Speaker: Most of my connectivity online is through LinkedIn.
Speaker: So Dr. Michael Waters, I'm assuming I'm the only one, is probably the best search for that in LinkedIn.
Speaker: And yeah, happy to connect.
Speaker: And thank you for having me on the podcast.
Speaker: So well said.
Speaker: We'll leave a link down below to your LinkedIn, any other social posts you have, and to go and get the book off Amazon.com.
Speaker: Most local purchases have been done on Amazon, I think.
Speaker: So Amazon is one area.
Speaker: You can buy it directly from the publishers.
Speaker: So Rootledge is the publisher.
Speaker: So either of those platforms would be... We will leave that link down below.
Speaker: So, yeah, thank you so much for listening and tuning in to Dubai.
Speaker: We're going to take a podcast.
Speaker: make sure to check our next episodes where we bring in again answering your real life scenarios in the biorealistic market so you get the answers from a trusted source that you're looking for we break down their thought process as well all right thanks so much and looking forward to tuning in next week
