Dubai’s property rent review regulations are to be shaken up. But is it for the better?
Rent reviews are currently linked to a geographically segmented rental price index. Reviews are capped in line with the average for a property’s location.
The Dubai Lands Department is rolling out a new index, said to factor specific building quality and amenities.
At first glance this looks like great news.
Vigilant. Proactive. Data-driven governance. But on reflection, could this be interventionist overkill?
An index comprised of such granular data becomes a mammoth task to maintain, even with the use of modern technology. Very possible that it falls on its own sword over time.
Example: A building’s owner spends millions today, completely upgrading its lift systems. How long until that Capex is reflected in the index? In real time? A month later? A year?
(More detail on how the index will be constructed and updated would help).
A Healthier Alternative?
Could we instead rely on market economics to determine rent reviews. At most, the regulator can set a cap and collar in place to protect against tenant and landlord exploitation.
Wouldn’t that be:
Less labour (and tech) intensive? Less subjective? More efficient?
All Systems Go
At the end of the day, property investment yields are a correlation between price and income. When the former is determined by free market economics, and the latter is controlled, the result is high price volatility.
The precise opposite of what a stable, healthy real estate economy needs.
Is this proposed change vigilance, or overkill?
Share your vote below 👇
For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.
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Inflation is hitting everyone hard. Interest rates are higher than they’ve been in years. Home prices have continued to rise, and buyers have cooled on buying homes in the short term.
But there are some things that real estate agents can do now to survive, and grow business during the coming downturn.
Savvy real estate agents are preparing for the slowdown. Doing everything they can to pick up momentum and come out on the other side a leader in their market.
Looking for ways to ride out the recession?
Here’s some tips to recession-proof your business.
1. Expand your Territory
When the housing market shifts, it rarely shifts all at once and all in the same direction. Typically, a cooling off in prices and demand for homes in one sector, means an increase in another. If your local market is quiet, start by expanding your reach a little outside of your everyday transactions.
Look outside your normal geographic area and outside your normal price ranges. Find where people are still buying and selling.
You might even consider a completely different niche—like divorce leads. Done right, this can be a generous source of qualified leads that can fill your pipeline indefinitely. Visit DivorceThisHouse.com and learn the secrets to tapping into this often overlooked lead-gen source.
2. Level up your Personal Branding
Now is definitely not the time to become a secret agent. The last thing you want is to drop off the radar in your market.
Focus your marketing efforts on brand awareness and social media marketing. You want your prospects to know who you are and what you stand for. That way, when they’re ready to pull the trigger on a purchase or sale, you’ll be the person they think of.
3. Healthcheck your CRM
Your customer relationship management (CRM) should “work” your database for you. Setting up your CRM to keep track of your prospects, clients, and leads in today’s real estate space is essential.
Focus your marketing efforts on people who will need your services three, six, or even 12 months from now. That will help fill your pipeline with clients and keep your business healthy.
The CRM will act as an assistant, reminding you of important facts about your clients, what you discussed in your last conversation, and when you need to follow up. Let the technology do the heavy lifting.
4. Maintain Existing Clients
When the economy changes due to uncertain conditions, changing your approach to servicing your buyers and sellers may be necessary. Your client relationships are key at this time of transition, so showing them that you can still help them in whatever market we find ourselves in is important.
Even when the market isn’t in your client’s favour at the moment, it’s important to maintain your relationship because the market will always change, and your clients will remember loyalty.
5. Keep ahead of the (Economic) Times
It’s important to understand how an economic downturn impacts housing. If things in the real estate market go south for a little while, we likely won’t be alone. Many sectors of the economy will also contract, and it’s essential to understand the housing market in the context of the overall financial picture. Not all sectors of your market may slow down.
Companies like Keeping Current Matters provide graphics, charts, and infographics that you can add to your branding and post online. Posting relevant market insights positions you as an expert to your sphere and helps inform your community about current market conditions.
6. Connect as a Real Person
Recessions are challenging for everyone. That’s why it’s important to connect with your clients as a human who cares about them (and not just a real estate agent who wants to help with a transaction).
Inflation is high, prices for consumer good are rising astronomically and the world seems a pretty unstable place right now.
A phone call or a text checking in can go a long way. Plus, you’ll stay top of mind when those market questions come up.
If all you care about is getting their commission fee, this will soon become obvious to your clients. Genuine agents will gain the trust of clients. They’re likely to remain loyal and turn to you for unbiased advice, even if the outcome is not in their favour.
7. Focus Your Attention on Your Sphere of Influence
Switch your marketing efforts to your personal sphere of influence and develop a stronger referral base. These are people who already know and trust you; you don’t have to win them over for business—all you have to do is be present at the right time.
Spend time reaching out to them, supporting their endeavors, especially in a social setting, such as advertising for their kids’ sports programs and sponsoring events. Those relationships are key when there is a recession, and the market is slow.
Establish yourself as the hyperlocal leader of your community, allowing you to give back in a positive and productive way.
8. Make the Switch to a Nearly All-digital Operation
If you haven’t done so already, an economic slowdown is a great time to get your business caught up to the 21st century.
Take your business confidently online so that you are able to conduct business much more efficiently, in a digital space, without you having to be at the helm constantly.
If you’re lacking in certain areas, sign up for some courses to acquire these skills quickly, or talk to a colleague in your office who you know may be comfortable with these technologies.
Try streamlining processing that ordinarily take up valuable time, using technology to improve their efficiency.
For example, boring tasks such as writing listing descriptions can now be generated using AI writing assistant technology. This saves significant time as well as improving lead generation.
9. Market Your Current Listings More Aggressively
If you’ve got listings on the market when a recession hits, the race is on to move those properties before buyers retreat. With unrealistic expectations over the past several months, it’s even more important to price homes to move quickly.
By ramping up your marketing with new social postings, and unique language, can make a huge difference. Well written descriptions will entice potential buyers to view your listings, and make you stand out online.
You can also refresh your current listings instantly using overwrite.ai which allows you to regenerate property writeups, if the property is taking a while to shift.
Your pricing strategy is going to need to change too: prioritize speed to close over the final sale price. Of course, you still want to get the most you can for your sellers, but the longer a property sits on the market during lean times, the harder it becomes to sell at any price.
10. Join a Team
As a solo agent, you reap all the benefits of your hard work. On the other hand, you also shoulder all the risks if things go quiet. Joining a real estate team can provide you with a source of leads, some useful tech, a greater sphere of influence, and the financial support you may need to make it through particularly tough patches.
Over to You
Come out on the other side of the recession ahead of the game. Savvy recession-proofing strategies can set proactive real estate agents up for major success.
A financial recession and its negative consequences can have some unexpected benefits for upstart real estate agents.
Your job now is to find creative ways to demonstrate value to your sphere. Keep communicating with people, create conversations, be as visible as possible, and stay authentically human.
What other ways are you recession-proofing your real estate business? Let us know in the comments, and let’s keep the conversation going.
This column does not necessarily reflect the opinion of overwrite.ai and its owners.
Despite superficial differences, digital darlings’ business models rest on the same shaky pillars.
When evan spiegel, boss of Snap, wrote in a leaked memo that the social-media company had been “punched in the face hard by 2022’s new economic reality”, he might as well have been describing America’s digital darlings as a whole.
After a multi-year bull run, the sector is suffering a sharp correction.
The nasdaq index, home to many consumer-internet firms, has fallen by nearly 30% in the past 12 months; the Dow Jones Industrial Average, made up of less techie firms, is down by less than 10%. Crunchbase, a data provider, estimates that American tech firms have already shed more than 45,000 jobs this year.
Macroeconomics is partly to blame. Soaring inflation and rising mortgage repayments are leading consumers to cut back on discretionary spending—and most digital offerings are discretionary.
Even the industry’s trillion-dollar giants have not been spared, despite continuing to rake in handsome profits. Alphabet, Amazon, Apple and Microsoft have collectively lost $2trn in market value over the past 12 months.
The movers, the streamers and the creepers
If you think big tech has it bad, spare a thought for the not-so-big tech. In particular, three business models embraced by firms born after the dotcom crash of 2001—and subsequently by investors—are losing steam: the movers (which shuttle people or things around cities), the streamers (which offer music and tv online) and the creepers (which make money by watching their users and selling eerily well-targeted ads). Over the past year, the firms that epitomise these business models—Uber and DoorDash; Netflix and Spotify; and Snap and Meta (which has tumbled spectacularly out of the trillion-dollar club)—have shed two-thirds of their market capitalisation on average.
And things could get worse. Despite being the global leader in ride-hailing, Uber on November 1st reported yet another quarterly loss. In its 13-year life it has torched a cumulative $25bn of cash, equivalent to roughly half its current market value. DoorDash, the leader in food delivery, also remains lossmaking. So do Spotify (despite decent revenue growth) and Snap (in addition to sharply slowing sales).
Netflix—a child of the 1990s but a streamer only since 2007—turns a profit but its revenue growth was down to 6% year on year in the third quarter, compared with a historical average of more than 20%. Meta’s revenues have now shrunk for two consecutive quarters.
On the surface, the movers, streamers and creepers—and thus their problems—look distinct. On closer inspection, though, their businesses all turn out to face the same main pitfalls: a misplaced faith in network effects, low barriers to entry and a dependence on someone else’s platform.
The network effects
Start with network effects, or “flywheels” in Silicon Valley speak—the idea that a product’s value to a user rises with the number of users. Once the user base passes a certain threshold, the argument goes, the flywheel powers a self-perpetuating cycle of growth. It also explains why so many startups seek growth at all cost, spending millions acquiring ever more customers to get the flywheel spinning.
Network effects are real. But they also have their limits. Uber believed that its headstart in ride-hailing gave it a ticket to riches, as more riders and drivers would mean less idle time for both, drawing ever more users into an unstoppable vortex. Instead, it encountered diminishing returns to scale: reducing average wait times from two minutes to one would require twice as many drivers, even though most riders would barely notice the difference. DoorDash’s hungry consumers likewise only require so many alternative Indian restaurants to choose from. And what network effects the movers enjoy are local; a user in New York cares little about the popularity of the app in Los Angeles.
Spotify and Netflix also tried to capitalise on network effects, as oodles of data on the listening and viewing habits of similar users promised to deliver an unbeatable product. Belief that Netflix’s trove of user information would give it a winning edge in creating content has been shattered by flops like “True Memoirs of an International Assassin”, which scored a rare 0% audience rating on Rotten Tomatoes, a review website. For the creepers—whose social networks are a network-effects business par excellence—the worry is what happens if the flywheels start spinning in reverse. Meta had a scare in the fourth quarter of 2021, when it lost 1m users. That loss did not turn into a stampede; the company has added users since. Next time it may not be so lucky.
From Boon to Bane
The second problem—low barriers to entry—also looks like a supposed boon that turned into a bane. Advances in technology, from smartphones to cloud computing, allowed all manner of startups, including the movers, streamers and creepers, to build consumer software cheaply and quickly. But that also meant that copycats soon emerged, and easy money allowed them to offer generous discounts to quickly build the minimum necessary scale.
Fending off the rivals
Although Uber faces only one real ride-hailing rival, Lyft, in its home market, its global expansion almost immediately ran up against local rivals such as Didi in China or Grab and Gojek in South-East Asia.
The combination of relatively simple products and free-of-charge user experience means a new twist on social media can be enough for a new challenger to gain momentum: just try to pry a teenager from TikTok.
The barriers to entry for the streamers are higher—Netflix and Spotify spend a lot of money making or licensing content. But they are not insurmountable, especially for deep-pocketed rivals. To fend off the challenge from Disney, which is spending a total of $30bn a year on content, Netflix has to keep splurging, too, to the tune of around $17bn a year. Like customer-acquisition costs for the movers, content costs eat into streamers’ profits. Disney’s streaming services lost $1.1bn in the second quarter of this year and the company has said that its Disney+ platform expects to lose money until 2024. Heavy investment explains why Netflix’s free cashflow (the money companies generate after subtracting capital investments) is equal to only 6% of revenue.
Is the clock ticking for TikTok?
The third flaw common to the three wobbly business models is their reliance on distribution platforms that are not their own. Uber and DoorDash pay a handsome fee to advertise on the iPhone and Alphabet’s Android app stores. Spotify forks over a 15% commission on subscriptions purchased on iPhones—a tax so annoying that it has filed a complaint against Apple over it. Netflix avoids the commission by forcing users to subscribe through their web browser, shifting the irritation to the customer—and quite possibly missing out on subscriptions.
Worst affected by the lack of their own rails are the creepers. Their dependence on the iPhone-Android duopoly is an existential threat. Apple’s newish requirement that users give iPhone apps permission to track their activity across other apps and websites, a move since replicated by Alphabet, may this year cost Meta an estimated $10bn in forgone revenue. Parler, a creeper favoured by the far right for its liberal attitude to speech norms, was temporarily suspended by both Apple and Android. If American national-security hawks worried about TikTok’s Chinese ownership get their way and force Apple and Alphabet to expel it from their app stores, the rising star of social media could find itself similarly thwacked.
The different business models do not face an equal balance of challenges. The movers would be in better nick if the industry had meaningful barriers to entry. The streamers may have been able to bat away new entrants if network effects had been stronger. And the creepers were in reasonable shape until Apple and Alphabet spoiled their party. One shaky pillar is problematic enough. Three of them is a disaster waiting to happen.
This column does not necessarily reflect the opinion of overwrite.ai and its owners.
This story has been repurposed from an article published online in The Economist on 31st October 2022, without modifications to the text.
For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our NewsBites blog, updated weekly.
overwrite.ai | the AI writing assistant for real estate | Sign up for your Free 7 Day Trial.