Abdullah Alajaji, Managing Director at Driven Properties, views on the fluctuating real estate market and the future of the city’s property industry.
It was back in 2012 when Abdullah Alajaji, hailing from a private equity background, noticed that the real estate market in Dubai wasn’t only coming back from the crisis, it was in fact blossoming. He decided the time was right to launch Driven Properties, and began by absorbing some existing long-term leases for existing buildings. Successfully navigating this route saw Driven Properties develop into a one-stop solution, tying up the property management and real estate spectrum with brokerage, interior design and other innovative services. This March saw the company launch Driven Holiday Homes, one of only three businesses in the country to be given an initial license by Dubai Tourism to provide short-term holiday rental solutions. Newly launched Driven Technologies has also just introduced the first custom-made ERP system in the region, developed specifically for Driven Properties and designed to make the lives of the company’s 63 sales agents entirely easier.
His agents are also allocated a maximum of 12 properties to manage at a time, considerably lower than the market average of 40, allowing them to focus properly on their portfolios. “Our agents are motivated by the fact they have so many avenues that they can get into. This creates a lot of opportunity for them, and of course there is commission related to each avenue, which keeps everything rolling smoothly.”
PEOPLE AT THE FOREFRONT
Speaking fondly of his staff, it’s clear to see that Abdullah’s people certainly drive the company forward. “You have to hire based on real estate knowledge, but also on morals and personality. We often hire people with no experience but who are motived as we can provide the rest.” In fact, his top agent was an ex-receptionist at the Burj Khalifa, a Chinese man called Zhiang Zhang (or Derek as he prefers to be known in the business). Despite having zero real estate experience when he approached Driven Properties, Abdullah noticed his passion and set him up with the training he needed before sitting back and watching as he flourished. “Within six months he was in the top ten, next year in the top three, and this year he has already brought in the most so far. There’s a big Chinese market coming in and he uses very unconventional ways to make connections with Chinese investors; he focuses on certain projects, goes to Chinese road shows, visits Dragon mart – which goes to show it’s really about your personality and how you conduct your business.”
Turning to look at the Dubai property market as a whole, Abdullah notes the transformation it has undergone. “We’ve seen sharp swings upwards, downwards and upwards again and now we’re looking at a small correction.” Comparing this fluctuation to markets in England, France, Canada and Australia, he notes that this type of fluctuation isn’t the norm. “These countries have different dynamics where property prices usually go up, but by single digits per year. There are no sharp increases or massive changes and this creates a comfort zone for investors.” The lack of such a comfort zone has definitely affected the Dubai market, especially for older investors who are increasingly risk averse. “That’s why Dubai was very exciting for the speculators who like to hit and run, to buy and just three or four months later, to sell. But that’s not really how international property markets work. It’s a market dysfunction. That’s what happened in 2008, and also what happened now – as in late 2012 a lot of people started buying and selling quickly.” Thankfully, Dubai Land Department have already made positive steps to change things, successfully introducing new regulations such as the mortgage law last year and the increase in property fees from 2 to 4 per cent. “The regulatory framework has certainly improved and I think investor confidence will improve in turn, over time we will see a lot less volatility in the market,” explains Abdullah. Dubai has very much become a metropolitan city that everyone looks to be in, it’s very much a New York or a Tokyo of the Middle East and that status doesn’t look set to change. According to Abdullah, “No other city in the region can complete with Dubai, at least not in the foreseeable future. It’s already ON the map, it’s not getting there – it’s there and that’s what has caught the eyes of new international investors.” With interest now stemming from China, Canada and the USA, the market dynamics are changing. The Arab Spring has also caused a flurry of activity with countries like Saudi, Syria, Iraq, Egypt and Libya moving their business towards the safe haven of Dubai. To ensure the market survives the current oscillation, Abduallah would like to see more legislation changes to clamp down on speculators. “Tying in the fee or changing the structure based on the holding period of the asset, for example if you buy today and sell in three months you need to pay 8 per cent, whereas holding onto the property for three years or more meaning you only need pay a 3 per cent fee would certainly make it more punitive to sell quickly.”
It’s exciting times for the emirate with the Expo just around the corner, something Driven Properties’ Managing Director believes will be a huge boost for the city and the country as a whole. “The Expo will open the eyes of the globe towards Dubai, as we all know, when Dubai does something, it does it big and it does it right.” For certain areas in the city, the Expo will be a major enhancement. That’s one of the reasons that Driven have opened an office in DIP Green Community. Other areas set to benefit, according to Mr. Alajaji, will be Motor City and Sports City. “The location of these areas; near the marina, close to the new airport and nearby the upcoming Expo site, coupled with their easy accessibility and the lack of multiple developers creating a streamlined layout, means that they will most likely have a second chance to catch the eyes of investors as the Expo approaches.”
Offering up some frank advice to those looking to invest in property in the coming months, Abdullah’s’ advice is simple, “If you can afford to buy then do so, the time is right especially with new affordable luxury properties coming on the market. On the other hand, if you’re looking to rent and are ready with cash available, you can try to negotiate terms and prices but, come September, I would put my money on things going back to where they were, with landlords and sellers, rather than tenants, having the upper hand.” With unquestionable confidence Abdullah concludes our meeting reiterating his belief in the city’s potential, “I certainly believe the future is massive for the city, there’s no reason for property prices to come down and we all look forward to the future of Dubai.”