A T Kearney report: Consolidation wave has commenced in UAE realty sector

A recently released report by A.T. Kearney, a leading global strategic consulting firm, has concluded the consolidation across the realty segment of UAE and GCC has started.

However, the report also added that it is a time for the real estate companies to learn a lesson from what had happened in similar markets, such as Singapore and Hong-Kong, adversely influenced by real estate cycle bursts in past decades. Very few companies managed to survive amid real estate boom and highly over-supplied environment in these countries.

The report said: "Developers demonstrate that they are mindful of lessons learnt from past real estate cycles in other markets, where companies that survived have built strong differentiated capabilities and diversified across the value chain to stabilize sources of revenues."

The report says that the primary focus of consolidation should be resource pooling, in the midst of highly cash strapped environment, when lenders are hesitating to fund real estate companies and firms are defaulting on payments.

 Dr Dirk Buchta, the Director and Middle East partner of A T Kearney, said: "Most regional markets have been confronted with strong oversupply - which peaked last year at over 100 per cent in the high-end residential and commercial segments in some GCC countries."