We asked Klaus Holscher, CEO of Kensington International, how his company reached its current status and about his views on the industry.
Kensington International is a highly successful company in the Dubai real estate industry. Can you tell us a bit more about yourself and the company. I arrived in Dubai in December 2004 and began working with a well known international real estate franchise from Germany as a team manager. In February 2006 I took over my own licence from the same brand and founded my company Bavarian Real Estate Brokers LLC. In less than four years I built up my team to have the most successful license with this brand worldwide. In December 2011 I changed the brand name and since then we have been an exclusive licenced partner of Kensington Finest Real Estate International. Most of the Kensington partners are also exclusive affiliates of Christie’s International Real Estate - so we are not only well connected to all Kensington shops but also to all Christies affiliates worldwide.
How many people do you employ?
Currently we have 32 employees across three different divisions.
How long have you been in the market?
I have been in this industry since 1984, so around 28 years in total. During this time I have worked in the real estate industry in Spain, Florida and Singapore, but mostly in the German market and mainly in Munich where I am from.
Why did you choose Dubai for real estate?
I decided in 2003 to leave Germany. I had dealt with a lot of clients from the Middle East, especially from Dubai, over the past 20 years so it was an easy decision to move to the UAE. I had visited Dubai regularly since 1988 and had always enjoyed it a lot. I saw Dubai growing and I always believed and still believe in this market and its opportunities.
What one deal will you always remember?
In 28 years I have done a lot of deals which are worth remembering. One deal I think about often has a very sad background. I worked very hard on a big deal for over half a year valued at approximately EUR 30 million (Dh143 million) - i.e. not a deal you do every day. After six months all the necessary details had been completed and we attended a meeting with the Public Notary to do the transfer. Both the seller and myself waited over three hours for the buyer but he failed to turn up. The next day I learnt that he had had a car accident on the way to the notary and passed away. This was terrible news and also after all that hard work the deal was unable to complete. But that’s life.
Where do you live and what do you like about the area?
I sold my villa in the Green Community West last year and I am now living in Executive Towers in Business Bay in a nice spacious apartment. I wanted to be closer to the city and disliked the tiring 45 minute drive each morning and evening to our office in Bur Dubai.
When I moved there the infrastructure was still very low and everything was under construction but now nearly all the streets etc are finished. The Metro station is just outside my front door and I love to be in the middle of Dubai. Also, I rarely have to use my car anymore.
What type of services do you propose on top of the typical real estate services e.g. relocation services, interior design etc?
With our special rental and sales departments for residential and commercial properties we are able to offer a full service to our clients. In addition, we are quite strong in international properties through our network of Kensington and Christie’s International Real Estate. We also offer contract management on rental properties to our landlords. This is especially attractive for clients who are abroad, of which we still have a lot of. We have someone who is reachable 24/7 to support landlords and tenants. I don’t see any reason to switch or extend to other services like interior designer. I am sure there are professionals who are doing this for sure and do it much, much better than we could. We are concentrating on our current business. The Dubai real estate market is still fairly uneducated in comparison to the European market, so there is enough to do for now to make it a more professional place to work.
2008 saw a massive downturn in the real estate market, you made it! How did you make it through the financial turmoil?
It was mainly very hard to manage cost and sure, we had to do some very painful cuts. First I closed down three shops in Dubai and later on also our offices in RAK and Abu Dhabi. We lost a lot of agents who weren’t able to assimilate in the new market and its conditions. We had several bigger European real estate funds which were quite lucrative and helped us through the recession, but obviously changes in the market will bring new challenges and opportunities, which we are well prepared for.
What key areas have you seen significant changes in since you have worked in real estate in Dubai?
The market is definitely maturing. There is still a lack of education, but mostly all the speculators are out of the market. They were using the Dubai real estate market as a stock exchange, dealing with pink chips. We have many end users today who are buying their home with their heart and not just for profit reasons. Also buyers, investors and end users are finally following the oldest rule in real estate: The Triple L - location, location, location! Quality is also very important nowadays and people are starting to appreciate this, however, I am starting to see some signs that the greediness is coming back to the market and the flippers are moving again. This is very unhealthy for the market.
Where in Dubai do you think prices are going to rise?
Prices will continue to rise on the Palm Jumeirah; it’s the only ready waterfront development in Dubai and very attractive for investors from abroad who are dreaming of their own home on the beach. The properties upgraded by their owner are the most popular e.g. Palm villas which have seen a huge increase in price. The Marina and most villa compounds will also see a further rise in prices. Everything is a question of demand and supply. We have in Dubai only one Marina and the options for good properties are limited, so the prices here will increase further.
Where in Dubai do you think prices are going to decrease?
I don’t think that we have areas in Dubai where the prices will decrease further. For sure we have some developments in the desert which will need a minimum of five years to see an increase in prices again. It will depend how fast the RTA are be able to develop the necessary infrastructure for these areas.
Which community do you think will provide the best value for money for investors this year?
I think you can’t generalise about this. If you are looking for a luxury development I would suggest Al Barari. Where in Dubai can I buy such a high quality and spacious villa for such a reasonable amount? I would also say that for greatest value for money, you should buy in the Green Community and The Villa project. However, in the Green Community we have to see how much the new airport will affect it, both positively and negatively.
25-30,000 new properties are expected to come on to the market in 2012. Do you think this will have an effect on price?
I have my doubts that these numbers are actually correct. It depends which areas these properties are of course. Day by day I see towers with hundreds of units being handed over and the market absorbs this supply really quickly. That shows that prime locations need more completed properties because there is demand in the market. One needs to note that if there are several thousand units being handed over somewhere in Dubai Land, it will not affect areas like Palm Jumeirah, Marina or Downtown.
What are the most important factors to you when selling a property?
The most important factor is good professional photos and documents. With our Dubai seller mentality this is sometimes a great challenge. The RERA Simsari system will help hopefully in the future to solve this issue. Unfortunately many sellers still don’t like to sign or accept anything in writing. That’s very sad because it spoils the market. The seller should be motivated to sell and I also expect the seller to pay us for our time and effort. In each market I have worked in it was normal to receive both a seller and buyer commission. For example In Germany I would receive 3% from the seller and 3% from the buyer. Many brokers here in Dubai are spoiling their income themselves.
What is your favourite restaurant in Dubai?
For elegance I would choose The Views in Emirates Towers and have been going there for many years. For a more casual dinner, I love to go to The Walk at the Creek Club Deira as it reminds me of ‘Old’ Dubai.
Where do you spend your weekends?
Mostly socialising, but also I like to stay at home and read a good book.
Where do you first take your guests when they visit Dubai?
I think the most unique place you have to visit are the fountains in Downtown, with the amazing view of the Burj Khalifa. I can stay there for hours and look at this masterpiece of architecture. For me it is still kind of a miracle.
What is your favourite project in Dubai?
Architecture wise it is for sure Downtown and Burj Khalifa. Socially though, I love JBR Walk because it gives me the feeling of the promenades in the villages at the Adriatic Sea in Italy.
If money were no object, where would you live in Dubai?
A nice penthouse in the Marina or a small villa in Al Barari.
Which of the unfinished or proposed projects would you most like to see completed?
There are too many in Dubai. I would love to see progress in the first phase of Business Bay. It will be part of the heart of Dubai and it makes me really very sad to see all this construction on hold, especially buildings like Iris Bay, which is 95% completed and is now an unfinished landmark.
When you leave Dubai, where will you go?
Good question. Honestly, I don’t know. Maybe Singapore or Malaysia for work. For my residence in older days I would prefer the Piemont in Italy.
Who is your business icon?
I am inspired by the Dalai Lama. But I also admire business icons like Steve Jobs who brought with his ideas a real value to mankind.
If you could do anything to improve the real estate market in Dubai, what would it be?
Bring strict rules and laws to the market which have to be followed by sellers and buyers. Still many players in this market don’t follow rules and regulations because they know there won’t be any sanctions.
What achievement are you most proud of in your life?
I am proud of my company and what we have achieved but I am also really proud that we are still here and I was able to fulfil my responsibility to my employees in particular through the bad times.
What is the most relevant piece of advice that you have picked up along the way?
That you have to fulfil your promises and if you are not able to do so, be honest and tell people the truth.
What are your projections for the year ahead?
There are very positive signs for the end of this year and the coming ones. I am looking to establish our brand more in the market and am planning to open some more shops, mainly in Downtown, Marina and Palm Jumeirah.