Many construction projects in Dubai that look unlikely ever to be finished will be cancelled in 2011, CEO of RERA, Dubai’s real estate watchdog, Marwan bin Ghalaita has said.
Speaking exclusively to Arabian Business, bin Ghalaita said: “You will see a lot of cancellations [in 2011] for projects that have no benefit for Dubai or for the investor.... If a project is not feasible for Dubai’s economy, it will be cancelled. And owners will have the right to know it… Yes, there will be cancellations… If a project does not add to Dubai’s economy, it will be cancelled.”
Investors in failed projects in the emirate have long been desperate for RERA to issue official cancellations in order that they can have money deposited in trust or escrow accounts returned.
Bin Ghalaita said since the financial crisis had rocked Dubai’s real estate sector, RERA had cancelled 115 projects that existed only as architects’ drawings, but “less than ten” projects upon which construction had started.
He said RERA had spent 2010 assessing the health of the emirate’s real estate sector and was now ready to act:
“Now, the end of 2010, I have clear picture of all of the projects here in Dubai…. Now it is clear on my dashboard, to see what project will go ahead, which project is in ICU, which project is in the emergency room, which project is fine. And this is the way we will classify projects here in Dubai. Green, emergency, ICU, dead. This is the way we have worked for the whole of 2010.”
Asked why so few projects upon which work had started had been cancelled until now, bin Ghalaita said: “It is in the process. It is in the process of evaluating and cancelling. It is in the process. It is in the process of cancelling.”
He added that in some cases, especially those undertaken before escrow accounts were made mandatory by law at the end of 2007, considerations for the plight of investors made him reluctant to cancel a project.
He said: “Cancelling a project is easy for Marwan. But I always think about the investor, what are they going to do? Imagine yourself as a regulator, in this situation. Cancelling a project is going to be music to your ears, because cancelling projects means reducing supply. Reducing supply is good for the real estate market. So cancelling a project is my wish. But I don’t cancel for the sake of cancellation… What do I do, if I cancel. Where I will throw the problem? If I cancel a project that started? Where am I going to throw all the 500 investors? To the court.”