By Andy Sambidge
RERA says new rules to boost investor confidence to be published in mid 2010.
Dubai's real estate watchdog is looking to bring in new legislation to regulate how house valuations are conducted, following the slump in prices which saw well over $100bn wiped off the emirate's property market assets.
Dubai's real estate regulatory agency (RERA) is planning to publish new guidelines for the industry by mid 2010 in a bid to create a more professional real estate valuation system, a senior official has said.
Mohammed Khodr Al-Dah, head of RERA's Land Department Real Estate Appraisal Centre (Taqyeem), said: "Having recognised the increasing importance of accurate evaluation of real estate assets, RERA is currently working with the Dubai Land Department and other interested parties to draft appropriate legal guidelines to regulate how valuations are conducted."
His comments, published in the latest MENA House View report by Jones Lang Lasalle, come as property prices in the emirate have seen declines of more than 50 percent from 2008 peaks.
In the report, Jones Lang Lasalle said that the introduction of more professional valuation standards was "an essential precondition for rebuilding the trust and confidence required for the recovery of real estate markets across MENA".
"Accurate and regular valuations comprise an integral part of the sound investment and risk mitigation strategies that investors need to adopt as the real estate market faces continued uncertainties and only selected stability in 2010," the report added.
Jones Lang Lasalle said that while valuations were not the sole answer to reversing a trend of falling transaction volumes, they could "provide a catalyst for the improvement in certainty and transparency required for the markets to recover".
all fine...but going by the past experiences, i doubt if anyone takes RERA and other authorities seriously anymore...
I'd settle for Strata being implemented first. How long have RERA been talking about it and never launched it. End users are being ripped by developer-owned facility management companies. Buildings are not being registered. Owners are being made to sign dubious home owner contracts. Fact is RERA are too stretched and have no power. The attitude is 'be happy you have a building'. The market is not going to respond favourably to unsatisfied owners and tenants. Let the market evaluate itself.
Ahmed is right, nobody seems to understand what is needed to bring back investors. A lot of promises but no real action. Investors have lost faith in this market because of lack of efficient laws prtecting investors. RERA and DLD overprmissed and under delivered. implement STARTA Laws, stop developers from bullying owners. Oblige Management companies to be managed by real professionals and you will get the results. The talk that tomorrow everybody will get a shave for free does harm property market credibility. Investors got the lesson and they will never be tricked again by RERA promisses
Real Estate values slumped throughout the World but Dubai was the worst performer as two key components to the Real Estate sectors growth have been missing since 2008. Dubai can be the first to recover providing we see actions instead of words ,revival of mortgages by Amlak and Tamweel and issuance of a 3 year investor visa can reverse Dubai Real Estate's fortunes very fast . I fail to understand why this hasn't been done so far considering that Real Estate became the magnet for investment in Dubai since 2002 , it is never too late to reverse past inadequacies and I think that now with the Global Economy on the path of recovery the above measures would be welcome and well received .
A number of things have contributed to this debacle. In my opinion the prime issue was the lack of due diligence done by mortgage providers at the outset. The fact is during the peak, people were getting multiple mortgages which they were not possibly able to repay merely by ticking the NO box when asked if they already had a mortgage. The result was that flippers were encouraged to take advantage of the leverage offered by putting in minimal down payments and financing the rest through mortgage providers in the hope of selling off the property within 6 months or earlier. This led to speculation which pushed prices higher and also created this so called demand that the expert estate agents kept quoting. Effectively the end users never existed . The so called demand was demand for building units to be traded. Now that the speculators are out the real picture has emerged with a tiny proportion of investors as actual end users or long term investors. RERA in my opinion has abandoned every one because they can't do anything about the reality of the situation. The fact that end users don't exist , the visa was withdrawn and the fact that people have lost alot of money does not bode well for the future. They need to do something in the investors favour to encourage them to reinvest ( the visa rule will never come back as it is against the social norms of the GCC). I suspect most of those who have properties are those who were holding the parcel when the music stopped in this game of pass the parcel.
Dubai Regulators shall search for implementable steps to re-gain trust by RE investors as well as residents in Dubai. I can give one step: 3 years residency Iqama for Investors and their immediate family as long as they own the fully-paid property of a certain level of current market value, as was before prior to abolishing the regulation. Canceling such Iqamas for investors and transferring them to a poor 6-months entry visa, has greatly motivated many residents and their families to leave Dubai as staying became a risky factor in unknown future!!
RERA has to CHANGE their approach to the problem, if DXB wants to revive the DEAD market. Investors have absolutely NO support from the government. If the future is not clear for your investment, who would jump into it? I certainly wouldn't!
I personally do not believe that the a 3 year investor visa will be issued. If you recall the few developers that had issued them had done so on their own sponsorship. For example if you owned an EMAAR property you were sponsered by them (without the right to work). This was a unilateral decision made by those companies and as is the case in most countries immigration is dealt with at a Federal level. There was no law passed by the Federal government of the UAE to issue those visas. Accordingly when the federal government did step in, all they did was implement the existing law which we cannot argue with as that is the law. It was the developers who took it upon themselves to use the visa as a marketing tool to sell their units without clarifying this situation no doubt expecting it to be ratified later which did not happen. Further more the 6 month visa rule is apparently also not as clear cut as one is led to believe. I have heard of a case of an investor applying for a visa under this law only to be told by immigration to go to the developer and then being told by them to go to immigration. The other issue is what is the amount of investment that would entitle you to a 6 month visa? Originally it was supposed to be AED1M (again not clear is that the amount of investment or the current market price etc..) and then it was rumoured to be AED2M. Their appears to be a line of ambiguity being followed. The actual message being given indirectly APPEARS to be is there is no Visa, 6 month or otherwise. We have to bear in mind that no country is obliged to issue a visa to anyone. Also I do feel that it may have been against the sentiment of the local population to see so many foreigners suddenly owning properties. However it would have been nice to kow these things at the beginning rather than now. Nonetheless I still believe that the mortgage providers are to blame more than anyone else. They hardly did any due diligence on the buyers ability to repay and gave multiple mortgages to people based only on their verbal assurances. Later they started to finance the premiums aswell which further accentuated the problem. If they had stuck to financing the original price only it would have ensured that only those investors who were serious and were willing to show their own financial commitment would buy these properties.
It's interesting to read all the comments here. However I'd like to point out that in all civilised economies there are significant regulations in place that need to be followed before a property valuation is issued. We do not have this in Dubai or the whole GCC. This is the purpose of the new legislation. We welcome all sorts of positive criticism and I receive people at an almost daily rate telling me their views. Because of this, we can fine-tune the system to benefit industry and Dubai. Hence if you have something useful to say, please get in touch with me directly via the Dubai Land Department, Taqyeem, Bani Yas Road, Deira, Dubai. 04 2030 000.