Dubai: Stick, twist or fold

So, Dubai then.

Yes, I know: Plenty has been said before but I can’t help thinking that the same commentators who couldn’t help but breathlessly repeat its name back in 2005 , peering jealously at the bold affluence, have done the Emirate a disservice since the decline in its precocious fortune at the end of 2008.

Visiting even in late 2008, from the moment you stepped onto the plane to arrival at your hotel you could see that prime above-line advertising space was dominated by real-estate brands, many of which are now consigned to the archive of what could have been.

Gone are the ostentatious developments based on ever more dubious concepts and odd celebrity endorsements; gone are the colossal ambitions of the freely financed mega-developers who proposed cities within cities with vast numbers of affluent, perma-content residents forming perfect new societies.

Now, as the autopsy continues for some of the highest profile casualties of the development industry implosion, we are seeing emerge an ever more realistic forecast of the future sustainability of the sector throughout the UAE.

This is all good.

Sanity is now replacing vanity and, with The Real Estate Regulatory Agency (RERA) taking a firm grip on the once fast-and-loose business of development in Dubai, a refreshing breeze is clearing much of the stagnant, post-collapse smog.

A renewed vigour is driving a vastly more appropriate development ethos.  A new round of project cancellations being administered by RERA, once the outcome of financial audits are complete, will potentially remove another 200 schemes from the approved projects list – more on that here http://www.arabianbusiness.com/up-500-real-estate-projects-facing-axe-rera-399045.html . It seems that there is little cover left for the also-rans and fantasists.

The realisation that, when times are harder people want value, they don’t crave superfluous luxury and businesses don’t want the most prime of prime office space means that investors are insisting on rationalised plans for projects, matching the markets needs rather than trying to force needs upon it.

Careful husbandry is being practiced and true regulation is supporting an understanding and an adherence to best practice and codes of ethics.

But is there anything to compel businesses to invest time and effort in developing business in the UAE?

Is it safe to get back in the water?
Clearly, the best response would come from someone at the heart of the subject in question and cutting out the journalist middle-men will offer sensationalism-free reporting.

Terry Redding, former General Manager of Projects for the Dubai Real Estate Corporation, Group Director of Development at Jumeirah and now head of strategic asset management consultancy, EXPER!ENT is one man such person and is uniquely placed to pass on first-hand experience.
We asked Terry to explain further about the fundamentals for doing business in the UAE….

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an opportunity borne out of a global crisis

Against the global backdrop of prevailing economic crises, social unrest and uncertainty, the Middle East Region continues to offer a relative advantage for future business growth over the next 3-5 years.

The United Arab Emirates, in particular, has the opportunity to build upon established international Government relationships, its own existing and planned infrastructure as well as its continuing drive to facilitate sustainable business growth and earned reputation for tolerance.

business has changed and the shift is irreversible

The global crisis has put business conduct in focus Governments, Regulatory Authorities, Corporations, Institutions or individuals that fail to take heed of the lessons to be learned will risk exposure to unqualified investment risk, business failure and the far-reaching consequences of economic failure. Effective governance, trust and transparency remain the greatest barriers to business confidence and, therefore, sustainable business growth and development.

It’s all about the relationship

My 14 year tenure in the UAE has taught me that relationships play an essential role in establishing your company here and will provide access to new business and tendering opportunities, as well as influencing procurement decisions. Given the value and scarcity of information, relationships provide knowledge of upcoming opportunities, assist with market positioning, and provide reputation and referrals.

UAE society and Arabic culture influence the importance of the role relationships play in business. UAE nationals account for less than ten percent of the population, but are the main decision makers in any local or quasi government company, and within government entities procuring services.

For service companies looking to expand operations into or within the UAE, the strength of relationships means that investing in staff with competencies and attributes that are conducive to trust building and networking is important. Staff should be personable, able to navigate through opaque environments, and expatriate staff should possess or develop cultural knowledge; this is a critical element in achieving success.

For any company wishing to commence trading within the UAE, the importance of establishing a local office cannot be overstated, especially within the Emirate where one envisages the bulk of company business will be carried out given the Client’s preference to discuss business face to face and most times at quite short notice. In any type of business disputes will arise and this is where ‘local relationships’ take on the highest levels of importance and also deliver the high levels of value associated with same, thus avoiding costly litigation and possibly ‘loss of face’ for your Clients, a situation to be avoided at all costs, otherwise the core business will suffer badly through ‘word of mouth’ as will personal and company reputation.

Given the global crisis referred to earlier, it was inevitable that certain developments here in Dubai would be delayed, mothballed, redesigned / value engineered but that does not signal the end of construction activities, in fact many projects are still underway and new ones being commenced; obviously not at the same pace and scope as previously but a common sense and professional approach is vital in such market conditions.

Many such projects are associated with the Hospitality & Leisure industry given the high levels of tourism still being experienced. In summary and especially for those companies who are ‘teetering on

the edge’ of investing in Dubai or other Emirates within the UAE

I provide the following advice; bring decision takers, come over and investigate the opportunities but please, please, talk to the right people and take advice from them, it is invaluable but, most importantly, it will be accurate advice based upon many years of experience and not ‘hearsay’ from supposed Industry insiders.

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Experiences and viewpoints will vary so we would welcome further input from the industry on how they are feeling about their work in the region.
A messy scene across the Arab world has triggered recoil in the fortunes of some business that have put a lot at stake in the apparently fertile emerging markets in North Africa and, as one leading architect in working in Egypt put it, “Everything has stopped…everything.” –

We’d like to know more about what’s happening for you anywhere in the region so please post your comments. You can be as critical as you like but please remain objective and to the point.

By Henry John

A bit about Terry

Terry has worked abroad for many years as a Project Director on major construction projects in a variety of overseas locations – UAE, Bahrain, Oman, Yemen and the West Indies – for major construction companies and brings to bear a wealth of experience gained from over 40 years in the construction industry; the majority of that time spent in senior management positions.

He or one of his fellow Directors would be delighted to assist with the provision of no nonsense advice on companies thinking seriously about such a journey investing in Dubai or other Emirates within the UAE

Terence Snaith Redding

CEO

EXPER!ENT