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Two key Dubai property resignations, what next?

 Last week the CEO of Union Properties, Simon Azzam announced he was stepping down, yesterday it was the turn of Nasser Al Sheikh, chairman of Deyaar Developments just weeks after being replaced as the Dubai finance chief.

Mr. Al Sheikh remains chairman of Amlak Finance, about whose proposed merger with Tamweel details are awaited and due any day. But it is worrying to see two such key executives resign as the Dubai real estate sector squares up to face major challenges.

It is not clear why either of these top executives chose to step down. And in the absence of any explanation it is only reasonable to conclude that they felt their time and strategy was up, and did not want to face what came next.

The stock market marked their former employer’s share prices down as a consequence. But behind the drama of the moment lies a very real question about the immediate future for Dubai property companies.

What happens if market confidence does not return? What happens if the global economic crisis continues and trading levels in Dubai remain subdued?

Then it is not just a matter of canceling or postponing projects. The issue is how to rationalize and consolidate the whole real estate sector into something with long-term economic viability.

Market information

This would be well beyond the scope of a small comment article, even in possession of all the right information. And that is surely the first place to start, and to be fair the Dubai Real Estate Regulatory Authority is doing an excellent job gathering information about the market and the status of its participants.

It will be to the RERA that the real estate industry will be looking for a new structure. Whether that means recommendations for mergers or consolidation across product lines remains to be seen.

Much will depend on the financial strength of the respective parties and the type and amount of construction activity undertaken. But unless the Dubai property market picks up soon a far wider review will be required to restore confidence, and until that is done the kind of transparency necessary to establish fair market prices will be difficult to achieve.