“Since January 2009, we have seen that exhibitions in Munich, Singapore, Abu Dhabi… were all very calm. So let’s see what is going to happen at Cityscape Dubai,” said Philippe Chaix, general manager of the Parisian office district ‘La Défense’ on the show’s first day. As expected, activity at the four-day exhibition in the emirate was calm as well.
Instead of rushing to stands and booking newly-launched properties, Cityscape visitors this year were monitoring the market, asking about construction and delivery schedules, and checking which companies were still exhibiting after a year-long financial slump.
Exhibitors came with a different aim as well. Instead of bragging about their new launches, developers answered visitors’ questions, explained the progress of their projects and offered their customers support in case of financial difficulties.
“I think that comparing Cityscape to last year is wrong,” said Markus Giebel, chief executive officer of Deyaar. “Before, it was to sell projects but now it is to tell the customers that we are OK. Both are important, but both are very different,” he added.
Cityscape by the numbers
The number of visitors fell nearly 50 percent compared to last year, from 68,061 to 38,000, according to a press release issued by IIR Middle East, the hosts of Cityscape Dubai. However, many exhibitors did not consider this decrease as bad news, since this year’s visitors were long-term investors and end-users only, as opposed to speculators who could cast their harmful spells on the market. “You see less people because 90 percent of the market was speculative,” said Hani Shammah, CEO of the Abu Dhabi-based Bloom Properties.
The number of exhibitors shrank as well. According to reports released last year, the number of exhibitors was 954. But Shamal Marketing Communications, who handles public relations for IIR Middle East, explained that this figure not only included the total number of stands, but also the different subsidiaries of a company that might have shared a stand, thus producing an inflated number. In reality, there were 340 stands last year. The calculation method was corrected this year and the number of exhibitors was 218, a decrease of 36 percent. Companies who chose to participate at Cityscape said that their purpose was to show they are surviving these difficult times and still continuing their projects. “People think that if you are at the exhibition, you exist and if you’re not, you don’t. So we don’t have a choice,” said Salem Ahmad Abdulla al-Moosa, chairman of Falconcity of Wonders.
More specifically, the message that exhibitors are sending is “construction and delivery.” Each developer is explaining to its customers the timeline for the delivery of their project. “Damac is participating at Cityscape this year to show the progress that we have achieved since last year and what we have been doing,” said Niall McLoughlin, the company’s senior vice president of corporate communications.
Sergio Casari, CEO of Emaar International, agrees with McLoughlin adding that, “The market is going through a cycle but it doesn’t mean that people should stop talking about what they are doing.”
A different kind of announcement
Instead of launching new projects, companies this year are announcing new payment plans and bank partnerships. Hydra properties, Aldar Properties and Bloom Properties were some of many who announced new financing options for their customers, by partnering with several financial institutions securing up to 80 percent of financing.
“Obviously the crisis has affected everybody. We have announced a few solutions and incentives where we interacted with these clients and worked with them to allow them to keep their investments and afford them,” said Rami Nasser, director of sales and commercial leasing at Aldar Properties. The Saudi-based Tanmiyat, for example, announced a new payment plan that links payments to construction milestones. “It is the right way… but since it is a new thing for many, a lot of uncertainties are being questioned. They need time to get used to it,” said Wan Muhamad Hasni Wan Sulaiman, advisor in charge at Tanmiyat.
Even those who have units to sell are not offering them on the market, but only showcasing what they have. “I don’t think anybody is selling at Cityscape. I think they are all on the same wave as we are. We are building and constructing and we hope that our clients can be a little more patient for delivery,” said Nooman Khan, senior vice president of sales and residential and commercial property at the City of Arabia.
A push for greater confidence
These messages and reassurances from developers have one purpose: to rebuild confidence in the market in general and companies in particular. “I’ve heard people say ‘finally a developer is listening to me and taking time to show me things so that I have an informed decision about what I’m going to buy’,” said Mohammed Bin Zaal, chief operating officer of Al Barari. EFG-Hermes, in a Cityscape note, was also upbeat about the outcome of the show. “In general, most developers did a fair job of conveying confidence,” said the bank. However, “the reality remains that most developers are still trudging their way through investor build-up and funding/liquidity constraints,” it added. Moosa from Falcon City thinks that next year, organizers should adopt a different approach by gathering developers and financial institutions together under one roof and “hitting two birds with one stone.” “Financial institutions are the spine of the real estate market. Let them come and speak to customers and let them be available,” he said.
Other activities
On the sidelines of the exhibition, Cityscape also hosted several forums and conferences discussing market conditions and other real estate related matters. For example, the show included the City Leaders Forum, Cityscape Connect, Green Day and a CEO networking lunch. It also featured the Cityscape Awards for Architecture in Emerging Markets, which had a record number of 300 participants. “The objective of these and other initiatives is to support the industry by providing a realistic and transparent view of what is happening throughout the region,” said Rohan Marwaha, managing director of Cityscape, in a press release.
Players’ expectations
As for market expectations, what is being discussed is whether the market has hit the bottom or not, and if recovery is expected in 2010. According to a survey of 28 developers conducted by the real estate consultancy firm Colliers International during Cityscape, 71 percent said that property prices in Dubai will fall further this year, while 25 percent think that they have stabilized.
Giebel from Deyaar said that no one knows if the bottom has been reached, but “the freefall is over.” If prices fluctuate between 2 and 3 percent up or down, it won’t matter. “If the lowest point is reached, I really don’t care, but has the bottom phase approached? Yes, absolutely.”
It remains to be seen whether the market hit bottom or not, and if 2010 will be a year of recovery or continued market fall. Still, whatever the situation, developers say Cityscape will always be one of the most important real estate exhibitions, and one in which they will participate. “Developers should be here in good and bad times,” said Hasni from Tanmiyat. “We are here for the long haul. You will see us next year and the year after.”
