Investors’ red tape worries prolong Dubai property woes

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Piecemeal moves to tighten real estate regulation in Dubai will do little to help the Gulf gain mature property market status and attract investment, say industry analysts.

Dubai’s once heady property market is mired in malaise after the speculative cash that fuelled its six-year boom dried up late in 2008, while more conservative Western investors prefer mature markets with greater transparency and regulation.

“You’re not going to get Western expat money deployed locally when there is still confusion over property ownership rights,” said Nomura Investment Bank analyst Chet Riley.

Andrew White, head of Middle East operations at UK-based investor Kenmore Property Group, said Dubai remains a very juvenile market by international standards.

“It will take another three or four years to actually become anchored by investors rather than traders,” he said.

By contrast, the property markets of Europe and the US are attracting increasing levels of investor interest because they are seen as being closer to entering a recovery phase than regions like the Gulf.

Dubai has introduced several tweaks to property laws and regulations to facilitate the change to an investor-driven market, from a trader-driven one, although real estate industry experts say much more needs to be done.

EFG-Hermes’ vice president of equity research, Sana Kapadia, said while the emirate’s regulation had become clearer over the past 12 to 18 months, mortgage and strata law need more clarity.

“Dubai has made headway in terms of setting up property owners associations but more information is needed on property service fees for example,” Kapadia added.

In May, the UAE said it would grant expatriate homeowners multiple-entry visit visas enabling them to stay six months at a time if they owned properties worth at least AED1m ($272,300).

Analysts, however, want more details on which properties and who would be eligible, and what the visa requirements are.

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