The property market in Dubai is stable but the industry still needs to build trust with buyers and to attract investors looking for long term returns, according to the emirate’s Real Estate Regulatory Authority.
It is seeing around 50 sale transactions a day, explained Marwan Bin Ghalaita, RERA director general and the organisation is carrying out a financial review of about 90,000 real estate units due for delivery over the next five years.
‘The market is in a stable state. We are seeing around 50 transactions a day in the Land Department and I am talking about fresh transactions. It is those coming to Dubai to take advantage of the opportunities in real estate,’ he told Arabian Business.
According to data from the Dubai Land Department, property transactions worth $33.49 billion were concluded last year but the property market has been hit by falls of up to 60% in prices.
‘Moving forward we need to capitalise on the good stories we have in Dubai. We need to capitalise on the trust,’ said Bin Ghalaita.
The agency has unveiled a financing scheme for developer and end user funding, which offers competitive loans to real estate projects that are at least 60% complete that is hopes will generate more sales.
Seven banks and Islamic banking institutions have joined the state backed Tayseer scheme, which awarded its first AED65 million loan to Al Manal Development last week. A further 114 projects have applied for financial support, Ghalaita said.
The Land Department has four projects coming in a row that will benefit from the scheme, he added.
But there are still concerns about the amount of new property coming onto the market. It is expecting to see 48,000 homes released on to the market in the next two years, increasing supply in a glutted marketplace by a further 12%, according to property consultants.
RERA is currently reviewing 90,000 units due to come on stream between now and 2016 and Bin Ghalaita said some will undoubtedly be cancelled. ‘Some people do not like the word cancelled, they keep saying delayed, delayed, delayed. Sometimes we have to face the truth and if a project is not good for Dubai then we have to admit and say it is cancelled,’ he explained.
About 50% of Dubai’s real estate projects were cancelled or suspended after the collapse of the market at the end of 2008 including high profile developments like the Tiger Woods real estate project.
Ghalaita said Dubai had learned lessons from the crisis and was now imposing stricter rules on developers in a bid to rebuild trust in the emirate’s real estate market. ‘Let us not forget the supply coming to the market is managed by us. Now we are getting tough on supply and have added new requirements for anybody who is tackling developments in Dubai, not only for sub developers but even for the master developers,’ he explained.
RERA is focusing on specific issues including the quality standards of real estate projects and whether developers maintain escrow accounts for investor funds. ‘Previously people who were promising to deliver high end properties were not, so we are building in more controls before they start development in Dubai. We are re-evaluating escrow accounts to make it more trustful for investors,’ he added.
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