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Tue 7 Dec 2010 11:06 AM

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EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita

Regulator says several construction projects to be scrapped next year

EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita
(ITP Images)
EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita
(ITP Images)
EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita
(ITP Images)
EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita
(ITP Images)
EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita
(ITP Images)
EXCLUSIVE: “You'll see a lot of cancellations in 2011” – RERA boss Bin Ghalaita
(ITP Images)

Many construction projects in Dubai that look unlikely ever to be finished will be cancelled in 2011, CEO of RERA, Dubai’s real estate watchdog, Marwan bin Ghalaita has said.

Speaking exclusively to Arabian Business, bin Ghalaita said: “You will see a lot of cancellations [in 2011] for projects that have no benefit for Dubai or for the investor.... If a project is not feasible for Dubai’s economy, it will be cancelled. And owners will have the right to know it… Yes, there will be cancellations… If a project does not add to Dubai’s economy, it will be cancelled.”

Investors in failed projects in the emirate have long been desperate for RERA to issue official cancellations in order that they can have money deposited in trust or escrow accounts returned.

Bin Ghalaita said since the financial crisis had rocked Dubai’s real estate sector, RERA had cancelled 115 projects that existed only as architects’ drawings, but “less than ten” projects upon which construction had started.

He said RERA had spent 2010 assessing the health of the emirate’s real estate sector and was now ready to act:

“Now, the end of 2010, I have clear picture of all of the projects here in Dubai…. Now it is clear on my dashboard, to see what project will go ahead, which project is in ICU, which project is in the emergency room, which project is fine. And this is the way we will classify projects here in Dubai. Green, emergency, ICU, dead. This is the way we have worked for the whole of 2010.”

Asked why so few projects upon which work had started had been cancelled until now, bin Ghalaita said: “It is in the process. It is in the process of evaluating and cancelling. It is in the process. It is in the process of cancelling.”

He added that in some cases, especially those undertaken before escrow accounts were made mandatory by law at the end of 2007, considerations for the plight of investors made him reluctant to cancel a project.

He said: “Cancelling a project is easy for Marwan. But I always think about the investor, what are they going to do? Imagine yourself as a regulator, in this situation. Cancelling a project is going to be music to your ears, because cancelling projects means reducing supply. Reducing supply is good for the real estate market. So cancelling a project is my wish. But I don’t cancel for the sake of cancellation… What do I do, if I cancel. Where I will throw the problem? If I cancel a project that started? Where am I going to throw all the 500 investors? To the court.”

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MIKE 9 years ago

THEN WHY WORK FOR LOT OF PROJECTS HAS RE STARTED SINCE LAST TWO MONTHS ....THIS IS JUST NOT TO RETURN INVESTORS MONEY ..

Sam 9 years ago

This is somehow positive depending on the actions RERA will take to protect investors after cancellation of any prject in terms of returning money spent by investors and having a clear 3 party settlement rules in mortgage cases.

In addition, it's not clear what will happen to projects where construction has started only on partial zones of the master plan and there is no clarity by developer on total project completion according to original master plan? which basically changes the whole dynamics of the project at the time of delivery!

Salvatore 9 years ago

Dear Mr Marwan we are talking about a multibillion problem so please do what is needed in a reasonable time frame. Investors have lost faith in the property market due to all the talk but no action.

Kashif 9 years ago

How does investors would trust that the developers have not played with figures to convince RERA about their claim as Green Catagory hence evaluation process need to be transparent.
Moreover, Land Department should reduce "Land Registration Fee" also to give a break to dipped customers. {2% buying price+0.25% original price+350} is too much for those who are paying now premimum although proprerty value has dropped down more than 100%.

Raj 9 years ago

So by when in 2011? Should we hold our breath? Its been 3yrs now and he is still assessing the health of the projects and classifying into ICU etc - thank God the hospitals dont work like this! The real question is when do we see our money!

Mohamed 9 years ago

I welcome and appreciated RERA's move. It is needed and should be implemented ASAP. If the project completed for less than 5-10% should be cancelled. Also the developer's credentials, ability needs to be examined. For example, a developer keeping open of 5 projects all with 0-10% completed, then he cannot possible to complete anyone. (i.e Sheffield RealEstate). Take every investor opinion/feedback whether his/her project needs to be continued or not. In an project, take the majority wish and apply the same. By this way Dubai satisfying everyone.

That escrow money 5 Billion should be distributed among the investors as soon as and by doing so every suffered soul will pray for Dubai. Like me lot of people will try to spend to move into Dubai and will take pary in its growth.

Aziz Amer 9 years ago

Its unfair for the people who booked to buy properties and then have no way to get their funds back, knowing that the projects did not start and will not start as most only pre sold less than 20% at the higher prices. Why wait and force us to pay lawyers for cases that will never get won unless RERA takes action. Please expedite the closure of these unwarranted projects and have people get their funds back soonest. Investors and contractors will retain their land and basic buildup to re build in teh future as demand dictates.

Thameez 9 years ago

Thank you Mr.Marwan for accepting the bitter truth about the cancellations of the projects. Still "Dubai has NOT overcome the crisis".

Peeved Investor 9 years ago

Agree Raj, like many of us we want to know where our money is and how fast it will be returned to us.Don't anyone hold their breath!
Three long years since this debacle unfolded. What happened to all the other promises made by the RERA hierachy in the media before? How many times have the hopes of investors been raised only to be ignored? No construction and our monies have just disappeared without a trace. Escrow laws totally ignored by the developer and were officially declared in June 2007 (had 6 months to comply, they didn't). No action taken to rectify!
In the article, it is apparently got to do with the process! The process of cancelling! Just cancel and show us our money in full!
It took all of 2010 to come up with this - just more rhetorical referencing and just more PR!
It is strongly envisaged here that all investors will once again be the biggest losers, hard earned funds ending up in a hole in the ground!!

DSC 9 years ago

Actually there is no mention of what the investors are in for here - do they get their monies returned?
What does cancellation mean...All monies returned?
The continuous delays outweighs any work attempted to date? Stop/start method and force majuere used & abused and of course the avoidance by the developer to not contact the investor once installments were paid and avoiding all contact made by investors re construction progress since 2007).
Are these sorts of projects eligible for cancellation and how is the investor going to get their monies returned in full for something that was heading no where from the start and the developer knew this when they continued to issue spa's with different completion dates (only found this out finding other investors in several of the projects the developer launched) but none completed to date.