By Damian Reilly
RERA chief says a new grading system will be introduced
real estate regulator RERA will soon implement a grading system for developers
in the emirate based on the quality of their previous work, CEO Marwan bin
Ghalaita has said.
Asked if the poor quality of some buildings
in the emirate would adversely affect the market in coming years, bin Ghalaita
said: “This is true. So what I am doing about that is I am classifying
the developer. So, any development that will come in Dubai, the developer will
be classified, as an A developer, a B developer or C developer. And I will make
it very transparent to the investors before he invests in any property in
Dubai, that he will know what kind of quality of what he is paying for.”
Bin Ghalaita added that
regulations would soon be changed to make it harder for developers to hand over
a project that was poorly constructed, thereby offering homeowners’
associations better protection from unscrupulous practice.
He said: “Before they hand over,
there will be a snag list, to certify that this has met the standard. This is
what we are doing. Quality should be better. Here in Dubai, some of the
developers promised people a world class structure, but when they delivered it
was not like that. It will affect the prices in the future, but will also
affect something very critical, it will affect the owners association money,
because the developer, once he has built the structure, he is gone. So it is
the headache of the owners association, to pay more money to maintain this
While it does make sense to identify poor quality property and the developer responsible for building it, one assumes that this will also penalise owners of these units. Potential new buyers will benefit from a developer grading system, however one assumes that new buyers will continue to focus on completed properties. Therefore, if you happen to be the unfortunate owner of a property delivered by a developer who is classified as grade C, then in an oversupply scenario which is where the market stands at the moment, then the chances of selling are reduced to virtually zero. Similarly there will also be an impact on rentals, oh that is an xyz company building they have a poor quality rating, better to look at alternatives, again the original buyer suffers?
If it is proven that the developer cut corners to produce an inferior product in the first place, what is the ruling on sinking funds. Logically if poor quality is identified then the sinking fund value should be higher in future.
The best news I heard so far!!! Thank you Mr. Ghalaita and I hope there are more people like you in the world!
This should have been done earlier..
this gentleman seems to be intellegently analytical of the dubai situation, and does a good job of renewing confidence in a much-maligned entity.
it does seem strange though that it needs an exclusive interview with a journalist for so many points to see the light of day.
these ideas and his other viewpoints should be part of a constant stream of information from RERA.
not only would this help somewhat to restore faith in the market (rather than the ostrich reaction which we so often see), but it would encourage the active open debate involving government, developers and investors about the real estate market here in the UAE.
Good idea!!! Will RERA finally also introduce different ratings and PRICE levels for older buildings? Still even 10 year old buildings are rated the same like new ones in the same area...
RERA does need to take on a PR agency to issue its statements.