Get the facts right on problems UAE businesses face

Anyone who reads and writes about economics must sometimes wonder what fiction is, where its boundaries are, and if they exist at all.

The question implies certain distinctions, as between fiction and fact, or more cautiously, between fiction and non-fiction. These distinctions exist, and are profoundly important when it comes to instilling or reinstating confidence in a post Covid-19 world.

Yet, we have put together among ourselves a rigidly simple account of reality, which does not conform to the facts on the ground. Real estate analysts, who for the most part are regarded as puerile — when they are regarded at all, continue to paint a picture of resilience — pointing to transactional data that we know is profoundly flawed and dated … and which no one believes in.

No easy recovery

The reality, which we must accept and face, is a picture of horror, where mortgages and sales data combined present a reality that shows the sector to continue to reel in the aftermath of the lockdown, and effects of which will be felt for years. Even as stimulus measures by way of deferrals on loans continue to work themselves throughout the economic ecosystem, what we know is that liquidity remains scarce, leaving tenants and landlords gasping for breath.

To present data that suggests otherwise is to do a disservice to those practitioners who want to navigate through the new spectrum of economic conditions. And yet this practice flourishes, because it is the servant of a useful, yet outdated, fiction, and it smothers us in nonfiction.

Get data right

There is no one who enjoys the grim truth that we now face. And yet we must. As we face the collective reality of stimulus packages that will most likely be deferrals of liabilities in the short- to medium-term in real estate, from rents to mortgages.

We must acknowledge that if the sector is to stabilise and recover, the data must paint an accurate picture of the reality on the ground. To this end, there are two pivotal factors that must be corrected for.

The first is in the production of data that gives a glimpse into the underlying factual data on the ground, which reveals that transactional data has cratered. Much like in the rest of the world, the production of accurate data will give stakeholders the first tool in overcoming the anxiety that is produced when there is a disconnect between what is on the ground and what is being published.

Relief needs to be for all

The second and more critical factor is that if landlords and developers are to give relief to the end-user/tenant, then they themselves need relief if we are to avoid a repeat of the downward spiral that cascaded into bankruptcies and stalled projects that clogged the legal system in 2008-10.

If this situation can be avoided, then banks and especially compliance departments in these banks must come to the party and not smother the customers with an overwhelming overload of paperwork that seeks to justify the need for relief — when that relief is obvious.

If regulatory filings the world over are being suspended, then it beggars belief when compliance departments appear to act above the law in insisting on voluminous amounts of papers that further fractures confidence when the latter variable is the most critical one that we need right now to be preserved.

Ease the weight

As we look for further reforms, that include immigration relaxation that provides for individual employment visas to be disassociated from the company to financial laxity, we need to move away from burdening small and medium sized enterprises in all sectors. But particularly in the real estate industry such that the sense of palpable anxiety is arrested and sanity can be restored again.

Powerless people can hardly demand coherency of themselves, and it is up to the regulators to enforce this latitude on the ecosystem that we are at odds with currently. Dante, the great literary genius, had a special place reserved in hell for those who were grave when they might have been able to provide solace and comfort, and ultimately some sense of optimism.

Were he alive today, he would have added a place for those who continued to propagate outmoded measures, for the amount of misery that it has added to an already beleaguered populace. The need of the hour is for reforms to provide the latitude that is needed for the private sector to get back on its feet again. For that to happen, the stakeholders that are currently hindering its recovery must fall into line.

— Sameer Lakhani is Managing Director at Global Capital Partners.