In times of uncertainty, maintaining functional and efficient real estate is
key. This is made more crucial nowadays in light of the fast-paced
advances in technologies and evolving consumer behaviors disrupting all
aspects of real estate. From these stems the need to develop proactive
strategies that focus on increasing the value of your real estate portfolio
and generate annual and recurrent cash flows.
Obstacles to achieving the optimal performance of real estate portfolios are
varied. Within the region, industry players have held onto large land banks,
most of which are undeveloped and situated in tertiary locations. To
develop the necessary infrastructure and supporting amenities requires
additional financing and time. In some instances, the larger pieces of land
have taken longer time to sell and have therefore depreciated in value.
In addition, given the traditional nature of doing business which relied on
family businesses or holding companies, real estate was not considered a
core function of the company. Therefore, formulating and developing
appropriate strategies, let alone making real estate decisions, has been
complex. This is made more difficult by the limited availability of market
wide and asset specific data, making it more challenging to understand and
manage the property effectively.
On a general level, one of the key considerations to ensure your real estate
portfolio’s profitability is being able to anticipate future market conditions.
‘Future-proofing’ your portfolio will allow for the flexibility needed when
responding to uncertain market conditions.
Much of this rests on having timely, accurate, and reliable data that can be
harnessed for actionable insights. This includes real-time data and longterm
market forecasts on macroeconomic and demographic indicators,
market performance, and property performance. Connecting these data
points together will assist in predicting future market directions more
accurately.
On a more granular level, a key strategy to overcoming uncertainty is
diversifying your portfolio. When the number of uncorrelated assets in a
portfolio increases, the variance of the portfolio, in other words the risk,
decreases.
Traditionally, Middle Eastern investors have been risk-averse, investing in
more stable locations and asset classes such as offices, hotels, and retail
centers. However given recent market conditions, we see investors moving
up the risk curve and diversifying their portfolios by incorporating alternative
assets such as industrial properties. Data shows that Middle East investors
spent more on industrial and logistics facilities ($315 million) than on retail
malls ($155 million) in the first half of 2019.
To unlock the full potential of your property portfolio it is also imperative to
reduce costs through proactive property and asset management. Unlike
other investments, investing in real estate means you can actively manage
each of your assets including regular maintenance, tenant and lease
management, improvements to efficiency and productivity, among other
elements. This ensures the asset’s longevity and increases the return on
investment.
Beyond closely managing and diversifying your real estate assets,
employing structured real estate financing solutions, other than the
traditional model of relying on bank lending, will allow your portfolio to grow
even in uncertain times. This may include mezzanine debt financing versus
equity, sponsorship and joint-ventures, peer-to-peer lending, and
specialised portfolio loans.
In order to optimize your portfolio value, minimise risk and maximise
returns, a strategic action plan incorporating the above will need to be
developed. Ideally this aligns expectations from your real estate with the
wider business needs and objectives.
A key initial step is evaluating the current portfolio and understanding any
budgetary or resource constraints to expansion and diversification. This
includes identifying sources of finance for future developments. From there
emerges the need to establish a long-term goal and identify and prioritize
opportunities that ensure portfolio diversification.
Once in place, developing a plan based on a set of measurable action
points, development timelines, and processes is crucial. The final stages
are implementation and continued evaluation and improvements under a
proactive property and asset management strategy. Ultimately, this will
ensure a continuous revenue stream and an increase in the overall value of
your portfolio.
Shaikhani Group said, this coming year would be the best year for the
Dubai. Reason is Dubai 2020 expo is coming. It will be a boom for every
industry. Moreover, they are trying their best to increase the productivity of
theirs projects so it will hand over by the end of this year….
Shaikhani Group explained, Dubai is known by doing things on right time,
they come up with those ideas where people think‟s it is not possible, long
time ago Dubai was a desert, now no one can say this was a desert.
People love to visit Dubai for holidays, because all facilities are there
including security which is a basic necessity of life.
https://www.khaleejtimes.com/business/real-estate/designing-smarter-realestate-
portfolios-in-times-of-uncertainty
