Real estate brokers in Dubai are now required by law to sit industry-driven examinations.
Real estate brokers are now required by law to sit industry-driven examinations. Arabian Property talks to Pranit Somaiya of Property Services Bureau to find out exactly what the exams entail.
The Real Estate Regulatory Authority has now issued compulsory examinations for real estate brokers. What are your thoughts on this?
The RERA examinations are something you have to do if you are a real estate broker now. The Government is trying to regulate the whole real estate industry here in Dubai and this, of course, is of benefit to both buyers and sellers of properties. If you are not RERA registered the Government can now fine your company.
What do these examinations entail?
If you’re a real estate agent and you don’t have this broker’s card, your company can be fined from US$13,600 to US$27,200.
It's a two-day course. It consists of having general information on how the market is working, how it is going to be regulated and how things are supposed to be conducted on a day-to-day basis. On the first day you are presented with a manual to go through. The course concentrates on the key point in this manual - how to conduct your business, how you're supposed to list properties etc. At the end of the second day you sit an examination consisting of 25 multiple choice questions of which candidates have to get 60% correct.
How difficult is the examination?
It's easy and I did wonder whether this was a deliberate move to make money off people as the course costs US$680. Those that pass receive a certificate which has to be sent off to RERA who then give you a broker's card which shows your individual identification number. This is vital because with this card you can go to the Land Registry Department and sign off deals. If you're a real estate agent and you don't have this broker's card, your company can be fined from US$13,600 to US$27,200. This has been talked about for over a year but it has come into play as of November 1, 2008.
Do you think this is a good step for the UAE real estate industry?
I really do think so because it will help regulate the industry and it will give an element of certainty to investors who are worried about the lack of regulation here. The systems that are coming in are similar to those used in the UK and the US. These have been incorporated into the UAE system. It should give some reassurance to investors. I think it's a good thing.
What is your understanding of the new real estate laws issued on November 1?
It will help regulate things. When developers are nearing completion of a project and before someone pays for it, the developer has to register the property to the Land Registry Department. The buyer will then receive a folder pack which will contain all the specifics of what they will get on completion. When people were buying off-plan in the past, some buyers weren't getting exactly what they thought they were paying for or what they were told they'd get.
Some thought they were purchasing an apartment with a sea view on a certain floor only to find on completion and when they got the papers that this was not the case at all. From now on, developments will be registered with the land department.
Details will include the actual unit number, building plans, floor plans so that consumers can see what the end result will be.
Some might say that such regulations should have been implemented before. What is your response to this?
The market would probably be much different to what it is today if things had been regulated earlier. I think property prices across the UAE would have increased more steadily as opposed to just shooting up. I think Dubai's property lifespan will be five to ten years maximum. I believe this would have been longer if the market had been regulated earlier. What are your thoughts on the UAE property market now?
Over the last six weeks the market has dipped. However, many experts that I have spoken to have said they believe Dubai's property market in many ways is only just beginning.
There is a lot more growing, a lot more regulating to do before we can look at Dubai real estate as a mature, sophisticated market. I think Dubai is somewhat protected although I think it's affected by international investors who have spent money in Dubai. These are currently being hit by the credit crunch and have possibly overspent in Dubai. However, the people that actually live and work in Dubai and invest in Dubai - it doesn't really affect us as such.
Do you think that new enforced laws such as the "one family, one villa" could result in residents and investors moving to other emirates?
Yes, I do. A lot of people are starting to move out of Dubai. The rents here are extortionate just to stay here. What I tend to find is that a lot of people are looking to move to Sharjah, Ajman and they will commute. Some people would rather do this than pay top dollar for a property that they don't even own in Dubai.
What kind of clients do you currently have?
We have mainly international clients from the UK as well as local clients. About 80% of our clients are still looking to buy in Dubai and these want to live here. The other 20% are looking for investment opportunities in Ajman and Ras Al Khaimah. Jebel Ali seems to be attracting quite a lot of interest at the moment, in part because of the international airport that will be built there. My opinion is that if you're looking to make a lot of money in a short period of time, Ajman is quite a good bet.
Prices there are around US$150 - US$160 per sq ft. It is very up-and-coming and prices there are very cheap. Once the appropriate power plants and water companies are in place, Ajman will attract huge investment I think.
What are your hopes for the future of the UAE real estate industry?
I am hoping that the new laws and regulations will keep the real estate industry here stable. A month or two ago, I had visions of the market exploding, and the burst bubble effect coming into play. Now, I'm just hoping that RERA will at least help regulate and implement systems that will make the real estate market steadier here. Then, we might see more people come here to invest.
Dubai is still a safe bet. We've got so many things happening here - the new airport, Dubailand, the Ski Dome, so there's a lot of tourist-driven attractions coming up. All of these things are a key factor in the Dubai real estate industry. There's going to be a lot more housing that is going to be required to support these developments.