Developers must get proactive over real estate payment plans

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The move towards reviewing payment plans could aid the construction industry.

A leading property executive said developers need to adopt a proactive approach to ease liquidity problems in the real estate market.

Doing so may be necessary to avoid customers having to default on their purchase contracts at a time when many are struggling to acquire loans from banks, Omniyat Properties group development director Stephen Ashford said.

Such a move would aid the construction industry, which has seen many projects put on hold as investors have struggled to make payments as per contractual obligations.

"The fundamental issue is a proactive approach by developers," Ashford said.

He suggested reassuring investors that a particular development is on track, including arranging access to construction sites and dealing with customers on a personable, individual basis, as positive steps.

"It's a question of modelling payments and trying to find something that fits with both parties," he said.

Ashford also suggested linking payments to construction, a move that is already at the draft-rule stage, which will be enforced by Dubai's Real Estate Regulatory Agency (Rera) in due course.

Ashford added that developers need to be innovative as the only alternative was to default.

"Defaulting doesn't help anyone," he said. "If I default a customer, I'm not going to find another one at the moment."

"We are seeing developers be proactive," agreed Al Tamimi & Co partner and head of the property department Lisa Dale.

"If an investor has purchased an entire floor and is facing termination of the sales contract, they may consolidate their purchase down from a floor to an apartment."

Dar Al Sharia Legal and Financial Consulting CEO Sohail Zubairi advised taking a lead from Sharia-compliant developers.

"If it is not the customer's fault, then it is Sharia to give the customer more time," he said.

Beyond developer activity, Moody's senior credit officer Khalid Howlader said that government support was also aiding the construction and real estate markets.

"Real estate companies are heavily volatile," he said. "But the prospect of government support is raising confidence."

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READERS' COMMENTS

Omniyaat
Posted by simon, Dubai, United Arab Emirates on Saturday 28 March 2009 at 16:58 UAE time


Why is Omniyaat giving comment for developers to help investors when themselves are not doing anything.Look at their project of PAD,they collected 75% money and the project is only at ground level and sending default notices if you dont follow their payment schedule.What a joke!

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