Reading the Pattern
Alan Robertson, chief executive officer of Jones Lang LaSalle MENA, speaks to Gavin Davids about how the Dubai real estate market is shaping up
Analysts are paid to be smart. They’re paid to look at the data, the facts and the information and make the smart decisions. Whether a real estate analyst, a financial analyst or even an IT analyst, the job description tends to remain the same. They discover meaningful patterns within the data, and then use those patterns to guide their clients towards making the decisions that bring in profit and success. Alan Robertson, the chief executive officer of Jones Lang LaSalle for the Middle East and North Africa, is certainly a man who knows a pattern when he sees it, and luckily for local real estate investors, the ones he sees in the Middle East are very promising. “Generally, it’ll be a pattern of growth. There will be ups and downs of course, but there will be growth patterns,” he tells Big Project ME. “If you look at Dubai, last year, the population increased by about 3%. So if we say that Dubai’s population is about two million, then that’s roughly about 60,000 people who will all need to have somewhere to work, somewhere to shop and somewhere to stay.” “So it’s generally going to be a growth story, but there will be some ups and downs along the way, and one potential danger sign would be if the residential prices get carried away,” he warns. “If they rise too fast, they could get over heated again, and that wouldn’t be too good for the market in the long-term.” Having joined Jones Lang LaSalle MENA as CEO in 2011, Robertson has been involved in the property market for a couple of decades. Prior to his current role, Robertson was the managing director of JLL Turkey, a position he held since 2008. Before that, he worked in commercial property markets in the UK from 1983 to 2008, and took over the firm’s Scottish operations from 2005. Given his wealth of experience and knowledge, perhaps it’s interesting to note that that he’s quick to point out that the real estate market in the region is in recovery mode and that this is good news for contractors. “If you take Dubai, the residential market began to recover 18 months ago. Throughout 2012 we saw progressive recovery. It started with the very best locations and the very best projects and the very best developers, but gradually, as we come through 2013, the recovery has become more widespread.” “That’s one of the key points in the way the market has evolved over the last 18 months. The recovery started at the very best and it has now expanded across a wide range of sectors,” Robertson explains It would be fair then to ask just what it is that is driving this growth in the market. Robertson admits that there is no one clear definite reason. Rather, he attributes the recovery to a variety of factors, which include the strength of the regional economies and their visibility as ‘safe havens’ for investment. “This is especially true for Dubai,” Robertson says, “it has benefited from being a safe haven, both on a regional basis and on a broader basis.” “As a result of the Arab Spring, we’ve seen Syrians, Egyptians and so on, invest their money into the market here. It’s not only from the (surrounding countries), the GCC and the wider Middle East are probably the biggest single sectors, but as a result of problems in the Eurozone, for example, we’ve seen a lot of European and Russian money coming into Dubai. We’re also seeing money from the Asia-Pacific region,” he asserts. “As for the tourism market, again, Dubai has benefited from the Arab Spring. People who used to go to Lebanon or Egypt are now coming here. So there has been an increase in tourism, and that obviously benefits the hospitality and tourism sectors,” Robertson adds. Terming the UAE as one of the most active development markets in the world, Robertson points out that it’s quite likely that the Middle East will end up playing a massive role in shaping the global construction industry. “If you look at Europe, it’s pretty slow in terms of new development and that’s likely to remain that way for some time. The US, that’s also been slow. Perhaps it’ll recover quicker than Europe, but I think it would be difficult to find a place in the world where there’s more happening in the way of new projects being rolled out, than we’re seeing here,” he explains. The success of the ‘Dubai Story’, he says, lies in the continual development of its infrastructure, which makes it more and more attractive to foreign investors as it continues to grow. “The better the infrastructure gets, the bigger the airport gets, the more direct routes there are, the more attractive it becomes to corporates as a regional headquarters location,” Robertson says. “And the more tourist facilities there are, the more attractive it will be to a large number of people who get to come here. So it’s accessibility, as a place and its quality of life, whether building or infrastructure, all make a very positive contribution.” Tied into this infrastructure development is Dubai’s desire to host the 2020 World Expo, he adds. With the emirate making a concerted push towards winning its bid for the six month expo, Robertson says that the long term benefits to the country and city will be immense. “I think it would be fantastic, not just for Dubai, but for the whole UAE, if Dubai was selected as the host venture for Expo 2020. One of the strengths of Dubai and the location of Dubai World Central, is that there’s a lot of infrastructure already there. The site has got a fantastic road network already and it’s got an airport on its doorstep. There are already plans to bring the metro to the site and it’s already master-planned,” he points out. “With the activities of Dubai World Trade Centre expanding on to the Expo site, there’s a permanent long-term use, a sort of legacy, after the Expo. From that point of view, Dubai ticks a lot of boxes, and it’s not like they’re starting with a clean sheet of paper, a lot of it is already done. In my view, that makes it a very strong contender.” As a result of this planned expansion and growth, Robertson says that Jones Lang LaSalle has decided to expand its operations in the Middle East. “We started project management, and a few years ago, we started property management. These are core businesses across the world for Jones Lang LaSalle, but they’re relatively new here. Project management accounts for about 20% of our global revenue, so it’s a big part of the wider business. Here, we’re primarily serving our corporate clients, so we’re doing some new build projects for multinational corporates, and what we really specialise in is fit-out for corporate offices, but we’re also branching out into some retail projects and one or two industrial ones, but it’s mainly in offices that we’re providing project management services for fit out. “We are also equipped to do new build project management. We don’t expect to take on specialist PM companies for the really massive projects, but for small to medium new size builds, we believe we can offer a good service.” With construction work in the UAE set to continue to boom, Robertson concedes that there needs to be some caution exercised, with certain sectors likely to be tough markets for new investors. “I don’t think there are many opportunities in the very large shopping malls, because these have been done, by and large, and they’re very tightly held, so they don’t really come out in the market.” “But for smaller retail developments, such as a supermarket with an arcade of 10 shops beside it, (I think) Dubai needs more of them, and they would be good investment packages.” “In the office market, you need to be selective, but we do see some good opportunities where some of the corporates will need to do ‘built to suit’deals to get the space that they want. So you’ll end up with a single-tenant buildings which are on long term lease, and we think this will be very attractive to investors”, he concludes.
