Dubai said on Tuesday that the world’s first governance charter for real estate developers – aimed at improving transparency in the sector – would be implemented by January 2013.
The Dubai Land Department (DLD) said it had launched the draft document with the blessing of ruler Sheikh Mohammed bin Rashid Al Maktoum.
Over the next three months, real estate companies will be educated about what the charter means, prior to putting the final touches on the final draft.
Staff training, starting from November, will continue throughout 2012, during which time real estate firms will be given time to make necessary changes to their operations to fit with new regulations.
This will be followed by obligatory implementation in January 2013.
The charter proposal is part of nine initiatives launched by the Department to spur a recovery in the emirate’s battered property market where prices have slumped more than 50 percent from peak levels.
Officials said the charter was designed to “achieve a qualitative leap in the performance of real estate developers and increase the transparency of the market”.
It also aims to attract foreign investments, raise the level of confidence and enhance the efficiency of real estate companies, DLD said in a statement.
The charter will call on developers to disclose details regarding their activities, progress of their projects, financial solvency and ability to manage quality and risk.
Sultan Butti Bin Mejren, director general of Dubai Land Department, said: “We have managed to carefully formulate corporate governance standards tailored for real estate companies.”
A committee of professionals set up to help draft the charter conducted a survey of developers and investors in a bid to choose the best corporate governance standards, the statement said.
Marwan bin Ghalita, CEO of Dubai’s real estate regulator RERA added: “The lack of an established culture of governance in the market in general and in the real estate market in particular, necessitates the application of the charter on three phases.”
He added: “Developing and strengthening corporate governance practices is a prerequisite for protecting property rights, attracting and ensuring the loyalty of investors, developers, brokers, lawyers and managers of property owners’ association in addition to residents, consultants and stakeholders from other entities. This will surely boost confidence in Dubai’s real estate sector.”
Real estate corporate governance in Dubai will focus on seven standards or criteria, including requiring companies to disclose details regarding the size of their projects, progress, contracts and market sales.
It will also assess the ability of the developer to complete and manage the project and will demand the provision of quarterly financial and accounting reports of developers.