BrazilUK real estate advisory Savills picks up Cluttons Middle East business
London-based real estate advisory Savills has acquired the Middle East operations of London-based real estate advisory Cluttons. Savills will gain its first offices in the Middle East, absorbing Cluttons’ UAE, Egypt, Bahrain, Oman, and Saudi Arabia offices, along with the firm’s 190 employees.
Despite real estate prices dropping in step with lower oil prices, the real estate market in the Middle East is forecast to grow in a major way in the next decade. JLL, a commercial real estate investment management firm, predicts that a major hike in private debt will help grow the market. Cultural beliefs, a lack of transparency, and a dearth of mortgage and bankruptcy laws have thus far led to relatively low levels of debt in the region.
However, the transformation programmes of various states in the region are introducing more transparency and regulations favourable to investment – like bankruptcy laws – which will make private debt more palatable. A big beneficiary of increased private debt will be the real estate market.
Banking on this, as well as stabilising oil prices, global real estate advisory firm Savills has expanded into the Middle East with the acquisition of the Middle East operations of Cluttons – also a global real estate consultancy. Cluttons Middle East’s UAE, Egypt, Bahrain, Oman, and Saudi Arabia offices, along with its 190 staff, will be rebranded as Savills – giving the firm a strong presence in the Middle East. As a result of its physical expansion into MENA, Savills will be dissolving its various local partnerships with other firms in the region.
Headquartered in London, Savills has over 30,000 employees and posted revenues of £1.6 billion last year. Also headquartered in London, Cluttons has 450 employees working throughout Europe, Asia Pacific, South Africa, India, and until now, the Middle East. The acquisition helps strengthen Savills global network, which previously lacked offices in the Middle East. The staff of Cluttons Middle East will bring their regional expertise in the provision of agency, management, and consulting advice to the Savills brand.
“The acquisition of Cluttons Middle East geographically links our European and Asian business by enhancing our EMEA platform,” Mark Ridley, Savills Deputy Group Chief Executive said. “With a market leading position, and strong local leadership, we will be able to offer a high quality service to both existing and new clients as we look to expand our platform of services.”
Cluttons Middle East is the most established real estate consultancy in the region, having moved into the Middle East over 40 years ago. In that time, the firm has built up a strong reputation supporting marquis residential, commercial, and industrial projects. Its clients span from the public sector to multinational corporations and family businesses.
“Despite economic headwinds across the region in recent years, Cluttons Middle East has grown from strength to strength and Savills’ acquisition is testament to our current position in the market,” commented Steven Morgan, Chief Executive at Cluttons Middle East. “This acquisition by Savills is an incredibly positive and exciting opportunity for all Cluttons Middle East clients and employees as it will merge our regional expertise with Savills’ global capabilities.”
“We are confident that the new consolidated offering will enable Savills to become a market leader in the region from the outset and we look forward to introducing the new brand to our clients and the wider market in the Gulf,” concluded Morgan. The sale of its Middle East operations will allow Cluttons to focus more on the UK market. The real estate consultancy was bought out by Rcapital last year, leading to corporate restructuring and the closure of some UK offices.
Digital Dubai
In other regional real estate news, the Dubai government is planning to roll out a digital real estate platform by 2020 that will reduce the need for pure brokerage services. With the slumping real estate market expected to decline further this year, the government has sought to encourage greater investment by reducing bureaucracy in real estate.
Based on blockchain technology, Real Estate Self Transaction (REST) will digitally manage real estate transactions while reducing brokering procedures. As such, the digital platform will pose a threat to real estate middlemen like brokers and agents, who will have to prove they can get a better deal than the digital alternative.
"While the new smart system has been positively received by the market, it could have a negative impact on the residential brokerage industry, reducing demand for agency services and even the number of agents in the market,” Mat Green, the head of research and consulting for property managers and real estate advisory CBRE Middle East commented.
