No one can say that Dubai isn’t making brisk strides in its quest to be a global leader in commerce, innovation, and development. For those in the city’s real estate sector, those strides have had a single primary focus: transparency. Over the past few months, the Dubai Land Department (DLD) and the UAE-based property rentals and sales listing platform Property Finder have been hard at work to improve the way data is collected and shared within Dubai’s real estate market.
The product of their partnership, a price index called Mo’asher (a name which translates to “index” in Arabic) is set to launch in the third week of September. However, news of the upcoming project has been circulating since a memorandum of understanding for the partnership was officially signed by the director-general of the DLD, Sultan Butti bin Mejren, and Michael Lahyani, the founder and CEO of Property Finder, in mid-July of this year.
The intent of Mo’asher is simple: the index will provide consumers and investors with more detailed insights about the properties they view in the market. The index will include data from as far back as 2008 and share essential information such as the average price per square foot per sale, the average price for sale, and the average annual rent for leasehold, freehold, and non-freehold properties. The index will require ongoing collaboration and contributions from both of the above parties; the DLD will be responsible for updating the index’s data each month, while Property Finder will provide continuing research and analysis via its data platform, Data Finder.
The shift towards transparency that Mo’asher offers is pressingly needed. As of last year, Dubai ranked just 40th out of 100 reviewed hubs in the Global Real Estate Transparency Index. Now, this isn’t wholly bad; Dubai’s 2018 ranking represented an uptick of eight places from 2016, and the city stands as the most transparent market in the MENA region. However, Dubai’s government is determined to push the city into top-ranking global prominence in future years. In 2018, the DLD continued in its pursuit of that goal by launching Dubai REST, a blockchain-based real estate self-transaction app that provides consumers with data on transaction values, and an index for rental increases.
But Why Does Transparency Matter so Much?
Transparency benefits everyone — from ordinary consumers to developers to the city as a whole. As the city’s first rental and sales price index, Mo’asher will be the first tool that public buyers can access to gather insights on real market trends. It will empower local, regional, and international developers and property investors the opportunity to base significant business decisions on data they know is real and supported. As Lynnette Abad, director of research and data at Property Finder, described Mo’asher’s impact for The National, “It just gives more transparency to what is actually happening in the market. Before, everything was very speculative. The index takes out the speculation 100 percent.”
As matters stand now, there are no investor-grade residential projects in Dubai. This is due primarily to a lack of proper project financing; developers are forced to sell off segments to fund the overall project. As a result, ownership of apartment buildings tends to be fractional, and the rental market is almost completely dominated by individual landlords. As such, the quality and cost of residential units often vary — even between identical floorplans in the same building.
The inconsistency has long been problematic for institutional investors, who base their investments on data and data analysis rather than “gut feeling”. Professional real estate investors require the long-term, reliable transparency and data that Mo’asher can provide. It seems probable, then, that more institutional investors will be willing to back residential projects in Dubai when the tool becomes available. Thus, Mo’asher will likely play a significant role in professionalizing Dubai’s residential market.
The transparency Mo’asher creates could be the spark on a metaphorical innovative powder keg for the Emirates as a whole, launching countless creative development projects and economic activity. The possibilities for positive growth is near-unquantifiable.
It will certainly be interesting to see how the city develops after the tool’s debut.