How would you categorize the property market in the UAE when compared to other markets in the region?

STEVEN J. MORGAN It is very different from any other market and has been very interesting to watch. The market was fuelled by a 10-year property binge, coupled with huge confidence in the Dubai government. Clearly, supply severely outweighed demand—and even that sparked a boom. Everybody expected to see a correction at some stage, but it came much faster than we had imagined. Although there is oversupply in most sectors, and the downturn has driven property prices down 50% in some cases, we are starting to see slow price increases. For example, the Dubai Marina is almost finished, as well as the Meadows and Springs Community, Arabian Ranches, and the Palm Jumeirah. In the completed projects where residents can live the lifestyle that the development was designed to provide, we see slow price increases in both rentals and sales. I think that it is fair to say that some of the oversupply is sourced from projects that are not as finished. You can’t build a master plan for development off the back of one tower.

ALAN ROBERTSON Retail is a very interesting and exciting sector. What we have seen here in Dubai, and I believe we will see it in Abu Dhabi, is its tremendous popularity with global brands. Global brands like to be in places like New York, London, Paris and Dubai. Whether it is a Western European, North American, or Asian brand, Dubai is a pretty cool place to have a presence. In that regard, there is very good retail demand. That is continuing, especially as North American and Western European retailers have to look outside their traditional markets for growth because these markets are either over supplied or are not growing due to the poor economic conditions. Brands such as Zara from Spain and Waitrose from the UK are coming to Dubai, and we see that trend continuing. The other trend in Dubai is that over the last 12 months there has been a divergence of performance within each sector, and it is quite noticeable in retail. As the UAE has come out of its economic downturn, the best retail centers have been doing very well, whereas poorer quality schemes have struggled to maintain footfall and are having to consider how to reposition themselves.

How have you adjusted your business strategy over the past couple of years to deal with the challenging local environment within the real estate sector?

SM Our business was interesting, because we are mainly focused on the advisory segment of real estate. About 70% of our turnover is from consulting; we are advising our customers on the way back up, in terms of banks that are lending, valuation work, development appraisals, and feasibility studies. We were actually quite cautious and conservative throughout the boom years, and we received a fair amount of criticism in response to this strategy. We were advising banks not to lend 95% loan-to-value, and instead suggesting that the market would correct itself one day. That served us well after the downturn, because people thought back 12 months to our meetings and reports, realizing that they should not have lent 95%. This credibility put us in a good position to tackle and survive the dark days of 2009-2010.

AR It has been a difficult period but every cloud has a silver lining and, in our case, we have found that our market share has increased very significantly. Instead of having a small piece of a large cake, we have had a large piece of a smaller cake. We attribute that to a flight to quality, which always comes in difficult times. As a result, the high-quality firms have done well, and the poorer quality ones have found life very difficult, and many have disappeared. That has been a noticeable trend here. The other thing we have done over the last two or three years has been to broaden the base of our business. We are now offering services in the Middle East that we did not previously, such as project management and property management, which are very important parts of the Jones Lang LaSalle business across the world. We did not start delivering these services here until about 18 month ago, and it has proved to be a very good decision. Our business is now broader based and more resilient because we are not so reliant on a small number of service lines. For example, when we acquire an office for a corporate client such as Shell, in other parts of the world we normally also project manage the office fit-out for them, but previously we were not able to do that locally.