Not creating a new real estate bubble
While Dubai’s property boom may be going bust, the authorities seem to be taking precautions to regulate the market better in the future.
December 31, 2008 12:53 by Aarti Nagraj
The new year may see fewer announcements of “spectacular new luxury” properties in Dubai because of the economic slowdown. And the Real Estate Regulatory Authority (Rera) seems to be taking several steps to ensure just that.
From January 1, 2009, developers and banks can only take payments worth 20 percent of the property cost from investors until construction begins, reports Emirates Business. Rera has also reportedly set up an 11-member Real Estate Development Trust Account Department to monitor the construction process.
In August 2008, the Dubai government passed a new law that requires all off-plan sales of real estate units in the city to be registered with Rera. And in November, Rera introduced a new online software called Oqood, which is being used to register all off-plan property sales and transactions. The idea is to offer a uniform template of property sales contracts between sellers and buyers, which has been approved by the agency.
Earlier this week, Dubai’s Department of Economic Development (DED) signed an agreement with Rera to stop freelancers from operating in the city’s property market. All real estate licensing procedures will now operate under a single system, said Gulf News.
All these steps are going to be a huge set-back to Dubai’s numerous developers; some of the developers were using funds paid by investors for on project to launch new projects.
While the financial crisis has already scared off many potential buyers, and ‘flipping’ properties is become more difficult, setting firm regulations may ensure that the property market is more transparent and better managed.