SEIZ­ING OP­POR­TU­NI­TIES

Forbes Middle East - - THOUGHT LEAD­ERS - BY MARY SOPHIA PHO­TOG­RA­PHY BY SAAD WADIWALA

MAR­WAN BIN GHALITA HAS LED DUBAI’S RERA THROUGH MANY MAR­KET CY­CLES. NOW, WITH THE HELP OF TECH­NOL­OGY, HE IS SET ON IM­PROV­ING TRANS­PARENCY AS HE EN­TICES IN­VESTORS TO DUBAI’S PROP­ERTY MAR­KET.

It is a quar­ter past nine on a Tues­day morn­ing and while mo­tion in the lobby of the decades-old Dubai Land Depart­ment build­ing is still slowly com­ing to life, two floors up, the of­fices of Dubai’s Real Es­tate Reg­u­la­tory Au­thor­ity (RERA) is al­ready a whirl­wind of ac­tiv­ity, the at­mos­phere abuzz with ring­ing phones and the oc­ca­sional ding of an el­e­va­tor. RERA’s early start can be at­trib­uted to its CEO, Mar­wan Ahmed Bin Ghalita, who greets us in a ma­jlis-style en­clave ad­join­ing his of­fice.

As a staff mem­ber hands out a small, warm cup of Ara­bic cof­fee, Bin Ghalita af­firms what I have al­ready guessed: “I am an early morn­ing per­son. You might even find me the first per­son in the or­ga­ni­za­tion (to come in).” Nat­u­rally charis­matic, with an in­fec­tious smile that has stood him in good stead when deal­ing with in­vestors, Bin Ghalita plays a key role at RERA, a sub­sidiary of Dubai Land Depart­ment—that of closely reg­u­lat­ing and man­ag­ing the stake­hold­ers of the emi­rate’s real es­tate mar­ket. It is a job that many would peg as chal­leng­ing, con­sid­er­ing how closely Dubai’s prop­erty mar­ket is con­nected to its eco­nomic growth.

Ac­cord­ing to a re­port re­leased by the Dubai Land Depart­ment, con­tri­bu­tion of real es­tate ac­tiv­i­ties to Dubai’s GDP was 7.2% in 2018, up from 6.9% in 2017. About 51,000 trans­ac­tions worth $60.7 bil­lion (AED 223 bil­lion) were car­ried out last year. Res­i­den­tial prop­erty trans­ac­tions were the high­est in num­ber. But, once a high yield mar­ket for in­vestors, Dubai’s prop­erty sec­tor has been feel­ing the heat as an in­flux of sup­ply com­presses prices and rents. Over­sup­ply has led to un­easy de­vel­op­ers call­ing out the is­sue pub­licly.

But Bin Ghalita says that it is not the sup­ply that is wor­ri­some at the mo­ment, but the de­mand. “The sup­ply is man­age­able by the pri­vate sec­tor, but it is the job of the govern­ment to cre­ate more de­mand,” he ex­plains. One way that Dubai could do this would be to pro­mote it­self in a dif­fer­ent way through road­shows, the CEO sur­mises. “We need a new strat­egy to mar­ket Dubai as the hub for hap­pi­ness and op­por­tu­ni­ties.”

Ef­forts are, per­haps, al­ready un­der­way for this trans­for­ma­tion. Mas­sive bill­boards city­wide fea­tur­ing an as­tro­naut side-by-side with a ro­bot and ti­tled “the world’s great­est show” in­di­cate the emi­rate’s plans to grab global at­ten­tion when it hosts the Expo next year. Mean­while, the gi­ant eye-shaped “Mu­seum of the Fu­ture” en­graved with Ara­bic cal­lig­ra­phy (which is still un­der con­struc­tion) at the mouth of Dubai’s main ex­press­way, Sheikh Zayed Road, sig­nals the city’s am­bi­tions to be­come a hub of in­no­va­tion in the re­gion.

A trans­for­ma­tion of sorts is un­der­way at RERA as well, where Bin Ghalita and his team are work­ing to make the real es­tate in­dus­try more trans­par­ent. One way they are do­ing this is by mak­ing more data avail­able so that in­vestors can make in­formed choices. RERA has re­cently started to pub­lish trans­ac­tional data and has even put up a ser­vice charge in­dex that will al­low fu­ture in­vestors to see how much they would be charged in terms of main­te­nance be­fore they in­vest. In 2018, the Dubai Land Depart­ment launched Der­aya, an ini­tia­tive that ex­am­ined the per­for­mance of Dubai’s real es­tate sec­tor in pre­vi­ous years.

Such ef­forts seem to be pay­ing off. Dubai is the Mid­dle East’s most trans­par­ent mar­ket, ac­cord­ing to JLL’s Global Real Es­tate Trans­parency In­dex, and was among the top three im­provers in its semi-trans­par­ent cat­e­gory. “Re­search has shown that there is a direct re­la­tion­ship be­tween the trans­parency of real es­tate mar­kets and the level of in­vest­ment they at­tract, as well as the num­ber of ini­tia­tives that have been launched to im­prove trans­parency and the qual­ity of in­for­ma­tion avail­able to real es­tate in­vestors,” says John Pea­cock, Head of In­di­rect Tax and Con­veyanc­ing at BSA Ah­mad Bin Hezeem & As­so­ciates LLP.

RERA’s ef­forts to be trans­par­ent do not stop there. The reg­u­la­tor has also launched a list of ap­proved bro­kers, clas­si­fied ac­cord­ing to their ar­eas of ex­per­tise and the sales they have com­pleted so far so that in­vestors do not get cheated by phony deal­ers. Com­piled within an app called Dubai Bro­kers, the list is meant to help in­vestors make an in­formed choice and sig­nif­i­cantly im­prove mar­ket trans­parency. “We call them con­sul­tan­cies be­cause they are not just mid­dle­men who would want to fin­ish the deal and get out,” ex­plains Bin Ghalita. Bro­kers on the list are rated into three cat­e­gories of gold, sil­ver, and bronze de­pend­ing on their sales records so far and are given stars in line with their per­for­mance. “An in­vestor can choose who­ever they want, they can see how many trans­ac­tions they have made and which area they spe­cial­ize in. We want the

“The sup­ply is man­age­able by the pri­vate sec­tor, but it is the job of the govern­ment to cre­ate more de­mand.”

in­vestor to have all the in­for­ma­tion be­fore they make a de­ci­sion.”

Bin Ghalita also says that RERA— which re­cently had its du­ties re­formed—is con­stantly listening to the in­vestors and de­vel­op­ers’ feed­back, and ad­just­ing the reg­u­la­tions. One of its re­cent moves to im­prove trans­parency was the launch of an elec­tronic system called Mol­lak, through which own­ers can see where ev­ery penny they pay in ser­vice charges will be used. “They can see the bud­gets for the projects, they can see where the money is be­ing spent and how much there is in the re­serve fund,” ex­plains the CEO.

Such steps might have en­deared in­vestors to the lo­cal mar­ket, but the CEO says the main fac­tor that has at­tracted in­vestors to Dubai is the in­fra­struc­ture it has built, the over­all qual­ity of life, and the ease of do­ing busi­ness. “Look at the soft in­fra­struc­ture, which is the data, the ap­pli­ca­tions, the process, the ini­tia­tives that the govern­ment is in­tro­duc­ing to the mar­ket,” he says.

Such steps have been ef­fec­tive, pro­pel­ling the coun­try to the top of the league in terms of de­vel­op­ment. Ac­cord­ing to the 2019 Global Com­pet­i­tive­ness Re­port, re­leased by the World Eco­nomic Fo­rum, the U.A.E. was named the most com­pet­i­tive econ­omy in the Mid­dle East, with the coun­try sig­nif­i­cantly im­prov­ing in terms of busi­ness dy­namism and in­fra­struc­ture. In Dubai, Bin Ghalita points out, the process of reg­is­ter­ing a prop­erty takes just 20 min­utes and an in­vestor can be on their way with the ti­tle deed in less than half an hour. “Imag­ine you are serv­ing more than 395,000 in­vestors from 200

na­tion­al­i­ties and you are pro­cess­ing in 20 min­utes.”

The best am­bas­sadors of Dubai, the CEO claims, are its res­i­dents who he calls “ci­ti­zens by choice.” Bin Ghalita points to the thou­sands of peo­ple who have built their busi­nesses from scratch in the emi­rate and in the wider coun­try. “The real es­tate mar­ket has given hope to peo­ple and they trans­fer this to busi­nesses.”

Com­pared to its early years, Dubai’s prop­erty mar­ket has made real head­way thanks to its ef­forts in dig­i­tiz­ing and pub­li­ciz­ing data for in­vestors. For ex­am­ple, the emi­rate re­port­edly moved up eight places within the “semi­trans­par­ent cat­e­gory” in JLL Global Trans­parency In­dex this year. “A range of new govern­ment ini­tia­tives through the pass­ing of new leg­is­la­tion re­lat­ing to a re­or­ga­niz­ing of func­tions be­tween the DLD and RERA to­gether with the in­tro­duc­tion of technology­driven prod­ucts have been a main con­trib­u­tor to this im­prove­ment and adding to the trans­parency of the Dubai real es­tate mar­ket,” says Pea­cock.

How­ever, ex­perts opine that more work needs to be done if the emi­rate wants to ad­vance and be at par with other mar­kets. “While it has pro­gres­sively im­proved its rank­ing in the JLL Global Trans­parency Sur­vey (rank­ing 39 out of 110 cities cov­ered in our 2018 in­dex), it re­mains in the semi­trans­par­ent tier, some way be­low the level of trans­parency achieved in more ma­ture global mar­kets such as the U.K., the U.S., Aus­tralia, and France,” says Craig Plumb, Head of Re­search at JLL MENA.

While Bin Ghalita would like noth­ing but to fea­ture Dubai among the top mar­kets, RERA’s jour­ney to its cur­rent po­si­tion has been any­thing but easy. Es­tab­lished in 2007, RERA came into be­ing to reg­u­late all real es­tate ac­tiv­i­ties, in­clud­ing off-plan sales in the fast-grow­ing Dubai mar­ket. At that time, an in­fra­struc­ture build­ing boom had fu­eled an un­prece­dented growth in ex­pat pop­u­la­tion, which in turn had led to a hous­ing short­age. De­vel­op­ers—both state-owned and pri­vate—rushed to close that gap by launch­ing grandiose projects.

“The mar­ket did not give you a chance to breathe be­cause you came to reg­u­late an ex­ist­ing mar­ket, and that is a dif­fi­cult thing to do,” re­mem­bers Bin Ghalita. Dubai had only started sell­ing free­hold prop­er­ties in 2002, and by 2007, the mar­ket was gar­ner­ing in­ter­est from in­vestors across the world. The onus was on RERA to find ways to reg­u­late, but it needed to be in line with the prin­ci­ples of the free mar­ket. “You need to be care­ful not to de­stroy a boom­ing real es­tate (mar­ket) with over reg­u­la­tion,” says the CEO.

Bin Ghalita and the team set to work with data al­ready avail­able from the land depart­ment. He fol­lowed it up with an in-depth study on in­vestors and their needs in or­der to tai­lor the reg­u­la­tions to mar­ket con­di­tions. With no prior ex­am­ples to guide him, and be­ing the first CEO at RERA, Bin Ghalita ad­mits it was a chal­lenge. “No­body was there to hand me the torch or a book­let ‘Mar­wan do this or that.’”

A year or two into RERA’s for­ma­tion, Dubai’s prop­erty bub­ble burst, send­ing house prices ca­reen­ing by 50% be­tween the third quar­ter of 2008 to mid-2009, ac­cord­ing to a re­port by Sav­ills Mid­dle East (erst­while Clut­tons). While the crash prompted RERA and Dubai to ex­er­cise stricter con­trols, like dou­bling prop­erty trans­ac­tion fees and higher de­posit re­quire­ments on mort­gages, it also re­al­ized the im­por­tance of tech­nol­ogy in en­hanc­ing in­dus­try best prac­tices.

In 2010—just three years af­ter RERA’s for­ma­tion— its par­ent firm, Dubai Land Depart­ment, es­tab­lished Emi­rates Real Es­tate Solutions (ERES) in a joint ven­ture with Emartech. ERES, later, went on to lay the foun­da­tion for a broader app called Dubai REST, through which in­vestors, own­ers, and res­i­dents of prop­er­ties in Dubai could ac­cess more de­tails. “This real es­tate tech com­pany gave us an ad­van­tage in all the soft­ware that is be­ing used to­day,” says Bin Ghalita. In a way, ERES helped RERA ex­per­i­ment in what is now termed as proptech. To­day Bin Ghalita says that RERA is work­ing with all new ideas re­lated to proptech. The agency also has sent teams to premier or­ga­ni­za­tions such as MIT to visit their real es­tate lab and repli­cate their in­no­va­tive solutions in the mar­ket. “Any new idea in proptech should lead to the hap­pi­ness of the in­vestors and res­i­dents,” he stresses.

A long-term em­ployee of the Dubai Land Depart­ment, Bin Ghalita is keenly aware of the ethos of the or­ga­ni­za­tion and, more im­por­tantly, about the mar­ket. A keen or­a­tor at global and lo­cal real es­tate con­fer­ences, he is ex­tremely fa­mil­iar with the nu­ances of the mar­ket and does not shy away from tough ques­tions. Within the Dubai Land Depart­ment build­ing, ac­quain­tances rush to shake hands with him as he walks down to the lobby. It has been his work­place for more than two decades.

“Any new idea in proptech should lead to the hap­pi­ness of the in­vestors and res­i­dents.”

The ex­ec­u­tive joined the Land Depart­ment as a sur­vey engi­neer in 1995, af­ter be­ing ed­u­cated in the U.S. His flair for ad­min­is­tra­tion later earned him a pro­mo­tion to Vice-Pres­i­dent of the depart­ment’s sur­vey di­vi­sion. “I learned ev­ery­thing in­side out and moved up,” rem­i­nisces Bin Ghalita, who later be­came the pres­i­dent and the head of the tech­ni­cal af­fairs depart­ment be­fore be­ing ap­pointed as CEO of RERA.

Bin Ghalita has not limited him­self to his du­ties at the Dubai Land Depart­ment. The Emi­rati is also the first vice pres­i­dent of the Fed­eral Na­tional Coun­cil—a con­sul­ta­tive coun­cil and the par­lia­men­tary body of the U.A.E., and the pres­i­dent of the U.A.E. Foot­ball As­so­ci­a­tion. “I took it as a chal­lenge to see how can I con­trib­ute with the team in chang­ing the struc­ture of foot­ball in the com­mu­nity,” he says, re­fer­ring to his role in the foot­ball gov­ern­ing body. Bin Ghalita stood for elec­tion three years ago and won. This trait of com­pet­i­tive­ness has also spilled over to his main job.

As Dubai’s prop­erty mar­ket set­tles down af­ter a decade of volatile prices, Bin Ghalita and his team are now look­ing to at­tract more in­sti­tu­tional in­vestors. “We’re work­ing with a new reg­u­la­tion con­cern­ing REITs,” he adds, while they are also in­tro­duc­ing new mod­els like crowd­sourc­ing and rent-to-own schemes to en­cour­age frac­tional own­er­ship. Crowd­sourc­ing is still an up­com­ing field, but Bin Ghalita hopes it will en­tice a crop of in­sti­tu­tional in­vestors to Dubai’s prop­erty mar­ket. Rea­son: he be­lieves that Dubai still has much to of­fer to in­vestors look­ing for re­turns.

“Many say Dubai prop­erty mar­ket is fairly val­ued, but I say we are un­der­val­ued with all the in­fra­struc­ture that is built,” he says. With Expo 2020 on the hori­zon and with reg­u­la­tions fil­ter­ing into Dubai’s real es­tate sec­tor, it is yet to see whether in­vestors will now flock back to the Mid­dle East’s busi­ness hub.

Mar­wan Bin Ghalita be­came the CEO of RERA when it was formed in 2007.

Once a high-yield mar­ket for in­vestors, Dubai’s prop­erty mar­ket has been feel­ing the heat as an in­flux of sup­ply com­presses prices and rents.

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