Quality of completion a critical risk factor for Gulf developers, says Sorouh MD

If customers' expectations of quality are not met, it will have negative impacts on the market as a whole, he said.

Speaking on "Risk Management in Real Estate" at the Cityscape Real Estate Finance and Investment Conference, Mr Al Khouri said:

"Consumers need to trust the development, the developer and the overall market.

"We are still in a relatively immature market, in the sense that many purchasers are yet to actually see what their money has bought. Most home "owners" in the UAE actually only own a promise. So what they are buying is actually the reputation of the firm.

"There are significant risks coming for developers that haven't realised that. It's one of the most important reasons behind Sorouh's focus on quality. Higher specifications now mean better results later - because they mean happy customers who will recruit more happy customers. There are real estate companies in the UAE that have yet to deliver a single property. The ones that deliver high quality products will prosper; those that don't will damage not only themselves - but the market as a whole".

Mr Al Khouri identified several areas of risk management on which real estate developers should focus, from macro-economic issues such as the credit crunch, down to local hot issues like the pressure on raw materials supplies and the question of possible property oversupply.

Another important risk facing property developers is the critical need for experienced management professionals within the sector, he said.

Investing in skilled real estate professionals, and retaining them, is vital to the long-term success of the developer and its developments.

"What makes a company qualified is professional management and resources, which is increasingly difficult to find at a high calibre, despite the generous packages offered, due to competition in the market and the global real estate boom.

"There has been tremendous growth in the number of developers and that means tremendous growth in the number of professionals needed to make these businesses flourish.

"But it is not just today we should be worrying about, it is the future too. That is why developers should invest in the very best calibre of professionals, at every level of the business, including strong investment in training and development of the next generation of managers".

The conference was accompanying the Cityscape Abu Dhabi exhibition, at which Sorouh unveiled the initial master-plan for Lulu Island, an island long close to the heart of Abu Dhabi residents that will now become the city's landmark development.

The master-plan shows Lulu Island benefitting from high-end, low-rise development with large open spaces and easy access to a wide range of services, facilities and leisure activities.

It illustrates a range of residential, resort and retail areas, and capitalises on the Island's water features with canals, marinas and a public beach.

Community facilities are planned at both neighbourhood and island-wide levels. Educational and sports facilities are highlighted in the park area, where playing fields are integrated into the landscape.

The Lulu Island vision is to offer a landscape of outstanding natural and architectural beauty.

Fabulous architecture will integrate with natural spaces and a 20 kilometre public beach, making Lulu Island the destination of choice for Abu Dhabi and its visitors.