Free «Discussion, Findings, Recommendations and Conclusions: The Real Estate Market in Dubai» UK Essay Paper
Table of Contents
The aim of the given research was to study the real estate market in Dubai to identify if the property development market would stabilize by the end of 2017 and if DAMAC Properties would be able to increase its annual revenue by 2019. Using a qualitative research design, in particular, controlled observation, under this research, a wide range of material, dedicated to the issue of interest, has been analyzed. The multiplicity of arguments concerning the perspectives of DAMAC Properties requires discussing them additionally.
To make the research unbiased, the material, included in the discussion, was not distinguished into opinions, predicting the stabilization of the market as well as the increase of income for DAMAC Properties and its competitors. Instead, each source was analyzed and evaluated separately to make sure that it is viewed from different points of view and all of its premises are considered. Since the development of the real estate market in Dubai and its perspectives are controversial, it is worth noting that none of the studied articles answers the question simply ‘yes’ or ‘no.’ Mainly, the articles contain the analysis of the most influential events and processes, including the description of their probable impact on DAMAC real estate. It means that the articles do not answer the research question explicitly, whereas the paper was dealing with the explication of those answers. While there was the material that covers the issue of property development in Dubai, only a few articles dedicated to DAMAC real estate were found. Moreover, it was found that the material for those articles was taken from the sources of DAMAC Properties, such as the website of the company with graphs, charts, and annual reports. It is a limitation of this research: the reliability of data, gathered mainly from DAMAC real estate itself, cannot be ensured. The matter is that the company may manipulate with the numbers in its reports to shape particular opinions of the publicity and investors. Thus, since the reliability of the initial data may be questioned, the accurateness of the findings may be questioned as well. Nevertheless, it is worth adding that the reliability of data could not be assessed – the access to the inner reports of DAMAC real estate and related to the Dubai real estate market affairs is limited. Any research on the given company would have such a bias – treating the data as reliable would be the only way of conducting such a research.
Another considerable limitation is the selection of sources: most of them were published online by the writers of the website. Though the search involved the expert opinions, the ‘expertise’ of their authors was not accessed. The use of the peer-reviewed journal articles would help to avoid these weaknesses, but the matter is that the journal articles about recent events in Dubai and related to DAMAC real estate in particular are absent. The research question is not a subject of scientific debate yet, so that online material was the only source of information. The authors of those materials took information from the published reports of audit agencies and of DAMAC Properties; therefore, these sources may be evaluated as the most reliable. The limitation of this research, on the other hand, may be viewed as its strengths: as the research questions have not been a matter of academic discourse, the given research adds it to the corpus of academic themes. In particular, the method of structured observation to explore the processes within real estate market was tested. The categorization of factors allows developing a standardized checklist, which would be applied to study the development of the real estate market. Essentially, the chosen method is imperfect: it does not allow finding causational relationship, though it makes it possible to identify correlations. Considering the above-mentioned challenges to the research, such as lack of reliable data and material, observation was an optimal method to study the real estate market development in Dubai and to predict the condition of DAMAC Properties by 2019.
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Among the strengths of the research, it is worth mentioning the consideration of multiply factors of the different scale, including global factors: changes in a geopolitical situation in the Middle East, shifts in currencies and oil prices, economies of the countries of the European Union; and local factors: governmental policies towards real estate prices regulation, competitiveness, concentration risks and over-supply, as well as increasing investments in Dubai. Though the research provides a clear vision on correlational and not causational relationship, it may be a base for further research that would incorporate the categories, identified in this research, as variables to determine causes of processes within the development of the property sector.
The results of the research demonstrate that the changing situation with real estate market development in Dubai and possibility of commercial interest of the scientist does not allow conducting the research that would totally met the requirements of the scientific discourse. The researched material is rather fragmented, which makes it necessary to provide a narrative description and interpretation of the research results.
- Throughout 2017, the decrease of the losses to real estate market was observed.
The monitoring of real estate market development demonstrated that the fall of prices for apartment, observed in 2016 and early 2017, is decreasing through the 2017 and would eventually lead to the stabilization of prices for real estate development. The factors that may impact the real estate market condition and position of DAMAC Properties may be distinguished into external and internal. The external factors are those that shape the UAE economy and the economic situation in Dubai, which shifts the situation with real estate sector development. Among them, the stabilization of the Dubai property market, rental market vs. apartment sales, a continuing fall of real estate property prices, economic growth of Dubai, strengths of the U.S. Dollar and the balance between demand and supply. The internal forces are made of the following: over-supply within the real estate market, the reduction of oil prices, instability in the Middle East, concentration risks, the fall of profit between 2016-2017, the unawareness of new markets’ needs, as well as the failure of marketing strategy despite the increased expanses on marketing. Identification of these categories allows coming to the second step of the research, which is the prediction of a property market condition by the end of 2017.
- The stabilization of Dubai property market development by the end of 2017 is being observed.
The interpretations of the continuing fall of real estate property prices vary: while some analysts view the continuing fall as it is declining by the end of 2017, they accept it as a sign of further stabilization. Others believe that the continuing fall of oil prices would lead to further fall of prices for real estate, while stabilization is expected much later. Within this debate, most of the analysts claim that the market witnesses positive dynamics. The positive dynamics was defended by the increase of affordable housing, investments in tourism, and infrastructure, which is associated with the World Expo 2020 that will take place in Dubai.
- DAMAC Properties would increase its annual revenue by 2019.
The financial reports of DAMAC Properties for 2015 and 2016 as well as the independent audit agency predict the increase of income and total revenue by 2019. This claim is based on the consideration of current and future projects of the company, and the increase of investments in Dubai real estate and infrastructure. Despite the fall of total revenue in 2015 and 2016, this fall is gradually decreasing. While the number demonstrates the fall of income in 2016, the analysis of the proposed solutions to potential threats demonstrates effective managerial strategies. In response to the fall of income and threats to the wealth of potential consumers, the company decided to erect more affordable houses, to reduce the amount of luxury projects, to cooperate with Paramount, Bugatti and other world brands, as well as to participate in various infrastructure projects. The reports demonstrate that the potential threats were well-considered, while the evaluation of positive and negative aspects of company’s responses to them unbiased the vision of the situation.
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Thus, the real estate market in Dubai will gradually stabilize by the end of 2017 and further, whereas an effective management strategy in DAMAC Properties would allow it to increase its total revenue by 2019.
The conducted research allowed formulating particular recommendations for further research:
- To use quantitative methods along with or instead of qualitative: it would allow measuring the impact of external factors on the performance and development of property companies.
Since the qualitative methods allow considering multiply factors and viewing the situation from the different perspectives, the further research that measure separate variables is needed. A quantitative research design, including statistical methods provided with necessary calculations, would make the research results mathematically measurable and precise. For instance, the monitoring of the real estate market could be translated into variables: the decrease of oil prices and the instability in the Middle East may be estimated as independent variables that impact the Dubai real estate market, which is a dependent variable.
- The prediction of the real estate market condition in Dubai was one of the objectives of this research. However, the problem was that the algorithm was this prediction does not exist. The predictions would be more reliable in case the methodology of prediction was developed.
This recommendation is a result of the absence of fundamental scientific researches. Though absolutely reliable predictions are impossible due to lack of agreement among the researchers, the tool that helps to assess the real estate market condition or the performance of a particular company is highly demanded. It is useful not only for the researchers but also for the potential buyers and investors, as it would allow evaluating the reports from the companies and expert opinions critically. Potentially, it would prevent from the decision making, which was based on a misunderstanding of the property development issues.
- Gathering the data on particular real estate companies’ performance from the independent institutions.
As stated above, a crucial limitation of this research is that the reliability of data cannot be ensured. The reports were taken from DAMAC Properties and the independent audit agency. However, the independence of this agency cannot also be ensured, that is why using governmental websites and official statistics would be more effective. Though the accessibility of data does not depend on the researcher, it is a feature of the UAE that despite governmental control, few data is published. If research were conducted at a different destination, the access to objective data would add to the reliability of further researches. Overall, a comparative approach to the indicators of company’s performance, as presented by different independent institutions, would sufficiently add to the accurateness of the research results.
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The condition of property market development is one of the major indexes that demonstrate the overall economic situation of the state. For the UAE and, especially, Dubai, the real estate market is one of the most promising sectors, which is interesting for home and foreign investors. However, since the late 2015-2016, the real estate market in Dubai has been experiencing the decline of process for real estate, which is associated with the fall of prices for oil. Such a decline has resulted into canceled projects and dissatisfaction of the buyers and investors, which would negatively affect the economy of the UAE. Recently, the debate on potential stabilization or degradation of real estate market has been begun among the real estate market experts. DAMAC Properties is one of the major property development companies that constructs luxury apartments, villas, hotels and tourist attractions, which has also been affected by the prices decline. Considering the significance of DAMAC Properties for Dubai property sector development and the UAE economy, this research was purposed to study the real estate condition in Dubai and DAMAC Properties performance. The objectives of the research were to monitor the Dubai real estate market throughout 2017 in order to predict if it will stabilize and if DAMAC Properties would increase its total revenue by 2019.
The goals of the research determined a qualitative research design – the method of structured observation. Since the paper involves a synthesis of different-scale events and processes, it is impossible to convert them all to variables that may be measured. To avoid excessive formalization, structured observation of DAMAC Properties performance and of the Dubai real estate market, as they are impacted by multiply factors, was chosen. The methods chosen required the categorization of data and its support by narrative interpretation. The material, selected for the Internet search, was critically analyzed concerning the way it evaluated the potential for the stabilization of the market. Overall, these articles provide a fragmented vision and do not consider all of the perspectives, which made it necessary to shape the holistic picture by own identification of correlations, provided below the checklist and the table.
The monitoring of the real estate market situation in Dubai involved the identification of the external and internal factors, which may considerably affect this situation. The most important factors are oil prices and the stability in the Middle East. The continuing decline of prices for real estate is decreasing, which is frequently interpreted as a sign of stabilization. As one of the key figures on the real estate market in Dubai, DAMAC Properties appears to be prepared for potential challenges: the innovative projects, more affordable living, cooperation with international brands, participation in infrastructure projects and the exploration of new markets. Thus, despite the risk of the continuing fall of prices, a managerial strategy of DAMAC Properties allows responding to the threats to maximize the company’s benefit. In turn, it allows making positive predictions for DAMAC Properties, since governmental support of the real estate sector, international investments and governmental investments in tourism promotion altogether contribute to smooth functioning of property development by 2019-2020.
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