By Shane McGinley
Emirate’s property market is stable, must capitalise on trust, says Marwan Bin Ghalaita
Dubai’s real estate market has stabilised and is seeing around 50 sale transactions a day, the head of the emirate’s property watchdog said.
RERA is in carrying out a financial review of about 90,000 real estate units due for delivery over the next five years but sees signs the market has steadied, said director general Marwan Bin Ghalaita.
“The market is in a stable state. We are seeing around 50 transactions a day in the Land Department and I am talking about fresh transactions” he told Arabian Business. “[It’s] those coming to Dubai to take advantage of the opportunities in real estate.”
Ghalaita said on March 17 there were 220 residential real estate projects under construction in Dubai this year.
“Moving forward we need to capitalise on the good stories we have in Dubai. We need to capitalise on the trust,” he said.
According to data from Dubai Land Department, property transactions worth $33.49bn were concluded last year.
The agency has unveiled a financing scheme for developer and end-user funding, which offers competitive loans to real estate projects that are at least 60 percent complete.
Seven banks and Islamic banking institutions have joined the state-backed Tayseer scheme, which awarded its first AED65m loan to Al Manal Development last week. A further 114 projects have applied for financial support, Ghalaita said.
“The government is allocating the money where the useful projects are,” he said.
The Land Department has “four projects coming in a row” that will benefit from the scheme, he said.
Dubai's property sector was hit hard by the downturn, with billions of dollars worth of projects put on hold or cancelled amid tumbling real estate prices.
Speculators caught with multiple properties and little chance to turn a profit fled the market and defaulted on purchases, while other buyers continued to honor their contracts, often paying installments even after work was halted in the aftermath of the crisis.
About 50 percent of Dubai real-estate projects were cancelled or suspended after the crisis, the government said last year.
Despite this, the emirate is expected to see 48,000 homes released on to the market in the next two years, increasing supply in a glutted marketplace by a further 12 percent, Landmark Advisory estimates.
Around 12 million sq ft of commercial space probably will be completed in Dubai this year, according to Jones Lang LaSalle. Office vacancy rates stood at 41 percent in the fourth quarter and may exceed 45 percent over 2011, the property broker said on January 23.Average rents dropped by 30 percent during the fourth quarter.
Several residential developers are now being advised to convert commercial space into serviced apartments or residential units until supply is absorbed, Ghalaita said.
Trust? What trust? How do you expect trust when investors' escrow accounts have been emptied while projects are uncompleted and the authority turned a blind eye? I remember an article in which he suggested that if the developers are using "force majeure" as a reason for delay in projects, then investors should use this reason to stop paying them. He forgot to mention, however, that cops will come knocking if you stop paying.
â€œMoving forward we need to capitalise on the good stories we have in Dubai. We need to capitalise on the trust,â€ he said.
Sure... and ignored all the complaints about investors. Why is RERA wasting its time? Dubai won't be trusted anymore.
I'm not sure if 50 transactions a day is something to get excited about. That works out to about 1000 a month and 12000 a year. That is less than 1% of the total number of properties currently out on the market looking for a buyer. Perhaps prior to this there were no sales at all hence the sudden mood swing to unbridled joy and optimism. Mr Galaitha's also talks of "..those coming to Dubai to take advantage of opportunities in real estate." Reading between the lines, most of the transactions are 'distress' sales being snapped up by speculators at significantly lower rates than the current market levels, probably no more than AED 300-400 per sq.ft. Hardly anything to cheer about.
I totally agree with Robert...and what about other projects like The Lagoons by Sama Dubai. They dissolve the company, fire hundreds and hundreds of employees, a way to save money they say, and yet when we the investor call and to ask about our investment, their breach of contract etc etc etc....nothing..where is RERA then...no escrow accounts, the project is nt even registered in RERA, a complete mess and again RERA and the government turn a blind eye.
absolutely agree. Trust in the market??
Now we are used to these so called news. We dont believe anything anymore. So RERA has to redifine their understanding of the word "TRUST". It doesn't have the same meaning for 500 K+ investors who are fighting to recover their monies. The next course of action is to create groups in different countries to freeze Dubai-based companies assets and recover their money.
What trust ? the only units being sold are distress sales that the poor owners cant keep up with the payments & cant get anywhere near there expected rental returns
RERA .. Trust .. when someone says trust me run the other way
You state that 12,000 property sales per annum equates to less than 1% of the total amount of property on the market today. This means that there are more than 1.2 million properties on the resale market at any one time in Dubai!!! I think that you need to recalculate that figure. With regards to the resale value in a prime location such as the Marina or Downtown areas the actual figure is roughly AED 1,000 as an average. These are real transactions that are taking palce and not just speculation.