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Wed 3 Sep 2014 01:43 PM

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Dubai developers insist lessons learned from 2008 crash

Company chiefs say lessons will help to avoid the same mistakes being made again during new property boom

Dubai developers insist lessons learned from 2008 crash
GCC construction, Middle East construction

Dubai’s developers and contractors have learned lessons from the recent housing bust which will help to avoid the same mistakes being made again, according to a panel at Construction Week’s Leaders In Construction 2014 event.

Bishoy Azmy, CEO of Dubai-based Al Shafar General Contracting, said: “I think it’s a good thing that a lot of us still remember the tragedies of the last crisis. There is a lot of wisdom in our minds despite the hype and the billions in project announcements.”

Ajay Rajendran, vice-chairman of Sobha Developers, which recently announced the $4 billion Sobha Hartland project, said that it would be “a travesty to forget all of the lessons we learned” during the recent crisis, but added that he believed the regulatory environment had changes which meant another bust was less likely.

“The problem in 2007-08 is that all of the money developers collected was used to buy another plot.

“Now that risk has been removed through RERA escrow arrangements. If a contractor feels the developer has an ability to sell and is pricing sensibly, that money will enter an escrow account and will be used to pay the contractor. So it is very secure from that point of view.”

Simon Moon, Middle East CEO of building consultancy Atkins, said there was “no doubt that there’s going to be huge opportunities”.

However, he said that much of the recent growth in the region had been fuelled thus far through increased government spending, which needs to be backed up by more private sector development.

He added that he would like to see a “maturing of the relations between developer, contractor and consultant”, as well as schemes being developed with greater integrity and with more thought being given into creating spaces where people can enjoy a mix of working, playing and living.

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Futurist 5 years ago

Reading between the lines they are getting nervous....

The property market 'died' 4-5 months ago and there is an increasing number of new developments being launched. Who is buying these new villas? Only speculators and other people with spare money. End-users are on the fence waiting for the inevitable adjustment. Fingers crossed there is no crash as that would be no good for anyone....

Bubblepop 5 years ago

HAHAHAHA Joke! Its it April's fools?

Q: Where is the "LAW REGARDING THE PROTECTION OF THE REAL ESTATE INVESTOR IN DUBAI"??
A: Still in draft format for years.

Dubai is still buyer beware when it comes to property and especially when it comes to off plan property - can somebody please point out to me what actual laws have changed related to property since 2008 - answer - None!

The Dubai property market has been in correction since May and now developers are afraid they might have missed the boat because they are launching their product at the end of an upwards trend in the cycle.

Advice to anybody considering off plan property is to study the Purchase Sale Agreement very carefully and have knowledge of the Dubai Property Laws - if you don't have time to do this have a lawyer do it for you or if you couldn't be bothered then don't go blaming anybody other than yourself if you lose money in the transaction.

A mini 2008 on the way.....

sonam 5 years ago

Its sad that inspite of all the measures that RERA is taking to curb speculation, there are still investors buying off plan properties using cash. And end-users including the ones who will take a mortgage to buy and live in the property, are not able to enter the market a) because of high prices b) Mortgage LTVs c) Clarity on visas for property investors. One tier of the market is made of cash buyers but the real market drivers who can bring stability and sense into an otherwise speculative market are unable to enter the market. Where are we heading?