Jess Stephenson, Editor of 3367 Magazine asks Lewis Allsopp CEO at Allsopp & Allsopp about the current market, where he sees it heading and the role the agent plays in a successful transaction.
Let’s start with an overview of the market, where do you see the market now and going into 2015?
I personally feel there is room for an adjustment in the market in 2015, speaking as a homeowner and investor in Dubai myself I would expect a correction over the year, and a controlled one at that. What I see now is a mature market emerging; with developers demanding more liquidity in their projects, while the mortgage cap ensures a cash foundation is being built. That said the majority of our buyers do purchase with finance, but with lower loan to value. Supply and demand are healthy thanks to the Dubai Government helping to manage and regulate supply. The Government’s careful control of the market with increased transfer fees and the mortgage cap has created a cushion for the market which is becoming more appealing to long term investors and end users. Ultimately creating a safer, mature and more sustainable market. This can only have a positive effect as the sector cements itself as a solid market.
Are there still buyers coming into the market?
This year we have registered a record number of new buyers, and continue to break company records by selling more homes, one way to be sure you’re getting adequate market knowledge from your agent is by choosing a larger company like ours, by volume of sales and leases we transact as well as our experience in the market, our clients get a fuller and more realistic picture.
Many people take a ‘hands-on’ approach to selling their home, listing their properties themselves on property websites or using an internet-based agent, how do you view that approach?
Firstly, it’s important to look at maximum exposure, our marketing is extensive; we spend six figures every month alone on property websites, something the individual isn’t able to access. We then use our property magazine 3367 to publish listings and distribute to around 7,000 homes door to door with 7days newspaper, as well as reaching over 100,000 people digitally. Our own company website generates over 200,000 unique visitors per month and has recently won Best Real Estate Agency Website Arabia at the International Property Awards sponsored by Rolls Royce.
Sellers are often surprised at the speed at which we can close a sale on their property. Generally, this isn’t from a direct enquiry for their property; but rather the pool of buyers who we are constantly in touch with and who we’ve been working with for some time. It’s our agent’s skills and proactive attitude, along with our investment in software which allows us to call up buyers we’ve been harvesting and qualifying, so we can offer new properties to them while they are ready to offer and close.
On that note, how important do you think it is that sellers meet agents?
Once you’ve decided to sell, it’s imperative that you meet the agent. The market has evolved in Dubai, it’s no longer a common place to purchase based only on unit type or location. The original communities in Dubai now face competition with new areas developing quickly, allowing buyers to be more discerning on their choice. Agents need to physically experience the factors that will sell your property, its location, upgrades, amenities, plot size, these are all factors the agent must experience in order to confidently sell the product, lifestyle and unique factors of the property to their buyers.
Being a larger company we sell more property and therefore have a wider base of first-hand knowledge of what is and isn’t moving in the market. When you meet one of our agents they can give you genuine examples of sold comparable properties. There isn’t another way of gaining this valuable information except the people who are selling the most properties, it’s that simple.
Generally, the property you own is your biggest asset; you should trust your agent and build an honest relationship with them. It’s going to be key when it comes to them negotiating the best offer in the market for you. It can so often be counter-productive listing with multiple agents, choose one on an exclusive basis and allow them a timeframe of committed marketing to sell your home. With an exclusive agreement, the seller becomes a paying client which allows accelerated marketing including featured internet listings pushing it to the top in searches, email and SMS blasts and features in 3367 magazines.
You mention the increased cost of buying in Dubai; what impact in your opinion has the mortgage cap had on the market?
The effect of the mortgage cap is very apparent now, for example, 18 months ago, buying a property for 5.5m dirhams would have required a deposit of 835,500 dirhams, now for a purchase price of 5.5m you’re going to need 1.95m dirhams for your deposit. The impact is twofold, firstly the buyers who would have been able to purchase with finance previously at 5m are now looking more affordable around 3m dirhams, thus driving prices through a correction. But this is also creating a solid foundation for the property market; let’s not forget it is the UAE Government who are controlling the market which is great, as they are creating stability of at least 25% cash in each property. All of this is contributing to a positive and liquid real estate market.
How do you feel the transfer fees affect the market here?
At the time of the announcement, people found it a steep increase, but put into perspective with the global market – purchasing in the UK over 1.5mGBP (approx. 9.3m Dirhams) attracts Stamp Duty payable to the UK Government of 12%. Proportionately, paying a 4% transfer fee is a small price to pay to live in this clean, safe, positive country especially when you consider it’s other tax benefits.
What’s your views on the off plan market?
We’re seeing developers start now to approach us to sell on their units, it’s a sign of the apprehension in the market. However, developer-driven schemes are making off plan more appealing to end users so we are seeing this become a popular approach to purchase. For example, the Emaar Preferred Access Program has been launched to provide long-term investors and end-users the opportunity to make investments in new project launches, the purchaser makes a down payment of 30 percent of the total value of the property and must maintain ownership until hand-over is completed to be eligible for the program. For the end users, who largely constitute our clients, this is becoming an increasingly popular option.
Who are your main clients at Allsopp & Allsopp?
End users; families and professionals upsizing and downsizing for their own use make up the majority of our clients. We, of course, have relationships with investors, but with the lack of availability of distressed sales, it’s not a fantastic investor’s market right now. With that, we are seeing more property chains forming, ie. Buyers have a property to sell in order to make their ongoing purchase.
Your company has recently won some impressive awards, tell us about those?
We’d won many of the Arabian Awards over the years but the highlight for me was winning Best International Letting Agency sponsored by Rolls Royce. Especially when we saw that we were up against globally recognized property brands, it was a proud moment for us. It’s put us firmly on the map internationally, which is fantastic as we have also just announced the planned opening of our second office in the UK after only one-year presence there.
On that note Lewis, you started 2014 moving into the 26th floor in Vision Tower, what is the size of the company now?
We have over 100 staff in our office not only agents but a whole machine of background operations from marketing, sales progression, even our leasing team have a dedicated Home Move Advisor to assist with handover and connecting utilities. We started with 6 staff in a villa in 2008, and this year we held our Christmas Party and year-end awards dinner for over 100 people at the Silk Ballroom in the Atlantis hotel, it’s reassuring to know our formula works and I’m looking forward to the upcoming year ahead.
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