By Neeraj Gangal
Dubai’s land dept & RERA also planning new guidelines to be forced next year.
Dubai’s Land Department is studying a new law to protect the rights of real estate investors, according to a report.
Sultan Bin Mejren, Director-General of Dubai Land Department, told the UAE-based Gulf News daily: "The department is working to put in order a law to protect the rights of real estate investors."
The top official added that the draft of the law will be ready to send to the Executive Office to get the government's approval by the first quarter of 2010.
The law would be comprehensive and include all items that seek to protect investors, Gulf News added.
"Our ultimate goal is ensure justice and set up proper rules and regulations to regulate the relationship between developers and investors," Bin Mejren told the news daily.
Dubai’s Real Estate Regulatory Agency (RERA) and land department are working on new guidelines, which upon government's approval, will be implemented early next year.
The UAE's real estate market has bottomed out and will begin to recover in 2010, according to economic analysts speaking at a panel discussion in Dubai on Wednesday.
“I think the real estate market has bottomed [and] I include Dubai in that,” Neven Hendricks, COO at Deloitte Corporate Finance Ltd - MENA region, said on the sidelines of the Dubai Knowledge Village Breakfast Club panel discussion.
... to be implemented early next year ? Are these laws for future purchases or they will also apply to investors who invested in Dubai real estate since 2005 ? Now that the so-called boom is over, while its good to have laws for protecting future investors, I would say, more importantly we need RERA to protect current investors who are not getting any answer from developers, RERA, etc.
Existing investors in Dubai real estate have been severely impacted due to the inordinate delays in the delivery of properties beyond the original stipulated date - (a) the interest cost on mortgage finance has increased substantially (b) the opportunity to rent out the properties and use the rental income to service the mortgage debt has been lost. The new law must address point (a) above. This can be achieved by subsidising the incremental interest cost by the financier and the developer collectively. In these difficult times, all stakeholders need to co-operate.
UAE is losing the trust of the investors. Only the developers have rights and RERA. As a foreign investor I lost my everything. Trust accounts are empty. I will never come again to invest.
Following are the issues that RERA needs to fix immediately, since they are easy to fix yet essential: 1 - Maintenance fees fiasco, its turning into daylight robbery and windfall to developers at severe and unbearable burden on long term investors. It must be stopped. Communities must be able to obtain bids from competitive management companies, which I believe will bring the Maintenance fees from average of 20 Dhs/sqf currently to about 6 to 9 Dhs/sqf 2- The ownership of common areas must be either be given to property owners of the community or be severely regulated. There is a huge room for abuse and some developers are already abusing it. For example, I know some for fact are selling the visitor parking! 3- Developer must not be able to collect payments if they are behind. Some have received 60% and they haven't even begun to built and are still demanding payments! Instead, they need to be bound by mandatory late delivery fees, regardless of their contracts. 4- Escrow accounts must be only withdrawn with permision of RERA according to work progress. This time not in theory, but in action. 5- Real Estate agents must be regulated. They need to stop double dealing, like demanding extra money from the buyer or seller in addition to their commission, for their help in reaping off the buyer or seller. They, also, need to be bonded, and responsible for investor loss, if they mess and make a bad deal (for example, seller was not the owner, or the Landlord was not the owner and was not authorize to lease, and etc.) The above should be fairly simple to fix and regulate. I am surprised why RERA has not fixed them already. The difficult issues, are the case were the developer puts a project permanently on "hold" and refuse to return the investor's money back. How to get the investor money back or give him his property without pushing the already weak developer into insolvency, where no on will win. Now that is the challenge.
I agree with Hamid about the possible immediate fixes. Another obvious one is the 5% property tax collected by DEWA on behalf of the Municipality, while all services are being provided by the developers like Nakheel, Emmar and UP, in lieu of the service fee. It has to be and 'Either/OR' case. Not both!!
I could not ever imagine investing in the UAE again. A case of once bitten... THere are other countries where the developers are bound by law to deliver on time and the build quality is 10 times better than we are used to getting in the UAE. Our money goes to South East Asia.