Analysts say Dubai should follow move to name cancelled property developments
Ajman’s property watchdog has pledged to reveal a list of the emirate’s scrapped real estate projects by early-2012, a move industry analysts say should prompt Dubai to follow suit.
ARRA executive director Yafea Eid Al Faraj said Sunday that the regulator planned to publicly list the names of its cancelled offplan projects and release a progress report on ongoing sites.
“We are doing this to give the market more transparency,” Al Faraj told Arabian Business. “So far we’ve put [together] the names” but the list is pending board approval.
“We are waiting [until the end of] this year to see if developers will come back and continue projects. That’s why we for waiting until next year.”
Scores of investors in Ajman’s real estate industry were hit when the emirate’s offplan market collapsed in late-2008, sending prices tumbling. In the $15bn Emirates City development alone, more than a dozen projects are on hold, affecting hundreds of buyers.
Analysts said the list would allow buyers to either pursue court action against the developers or attempt to secure a refund against their initial investment.
“It will increase the level of transparency and market information and will assist developers and investors in making more informed decisions about the Ajman market,” said Craig Plumb, head of research at property consultancy Jones Lang LaSalle.
“At the end of the day, the amount of new supply coming on to the market has its own implications. If half the projects are cancelled for example, for supply and demand this has pretty big implications,” said Mathew Green, head of UAE research and consultancy at property analysts CB Richard Ellis.
“It’s also important to understand which developers seem to be most at risk. It all helps to build up a picture of what is happening in the market now and where it’s likely to go.
“Given what we have seen in Dubai, it would be reasonable to assume that Ajman will have a relatively high number of cancelled projects as well.”
But Plumb warned the move would also put added pressure on Dubai’s property watchdog RERA to publish a full list of the city’s cancelled construction projects.
“ARRA has been modelled on the Dubai regulator, RERA, who has also announced the official cancellation of up to 200 projects in Dubai. To date, the list of these projects has not yet been released and this makes it more difficult to accurately predict future supply levels,” he said.
Dubai, the Middle East’s worst performing property market, saw billions of dollars worth of projects suspended or scrapped after the downturn wiped 60 percent off the city’s house prices.
Speculators caught with multiple properties and little chance to turn a profit fled the market and defaulted on purchases, sparking an emirate-wide property collapse.
Some $170bn worth of construction projects were cancelled and delayed in the UAE by August 2011, Citigroup said earlier this month.
RERA said in May that up to 500 real estate developments in Dubai would face the axe if deemed financially unfeasible under new rules. The emirate has also pledged to keep a tighter rein on offplan projects in a bid to avoid the speculator-driven bubble created after 2006.