The CEO of Dubai’s property regulator warned developers to deliver on what they promise and maintain the trust that the market has built.
Speaking at the Cityscape Global conference, Marwan Ahmed Bin Ghalita, CEO of the Real Estate Regulatory Agency (RERA) - the regulatory arm of Dubai Land Department - said while the trust is back in Dubai’s property market, developers who fail to deliver promises on projects risk ruining the faith shown by investors.
“My message to the developer: always deliver what you promise, because trust is there in the market; we don’t want to spoil the trust,” Ghalita told the packed audience at InterContinental Dubai in Festival City.
“Whatever you promised, you always need to deliver it. We as a government regulator are always watching that, but the first line of defence is you. As a developer, always deliver what you promise.”
He extended the warning to real estate agents, saying they should give investors more information than they require when selling a property.
“Real estate agent: you should educate them (investors) this time,” he said.
“Flood them with the information they require, even more than what they require, because you are a consultant, and not just a broker that wants to finish the deal. The real estate market is here to sustain; it’s not just about closing one deal, getting the commission and flying away.”
Ghalita said RERA’s job is to protect the investors, whcih helps build confidence in investing in Dubai’s property market, and creates a positive sentiment for others to buy.
“We as a government have a responsibility to protect the investors’ money in off-plan sales, and this is what we’re doing by changing the rules and regulations based on the market conditions,” he said.
“Most of you know that nowadays we don’t accept less than 50 percent deposit in the escrow account before we start releasing the money for the developer, and in some projects we raise it to 70 percent. This is our job, to make sure that the investor money is secure and protected.”
Addressing ongoing concerns about oversupply, Ghalita said this was in the hands of the developers who launch new projects.
“If we come to the opportunities that the real estate market is giving, everybody will be worrying about price, [and] oversupply, but at the end of the day there is always an economic cycle for everything and this industry lays in the hands of the developer themselves - whatever they want to offer to the investor at the end of the day,” he said.
“So managing supply, from my perspective is, as a government [regulator] we put rules and regulations and services in place, making sure that the investor is safe in terms of his investment. But how much supply is in the market, it depends on the developers.”
Ghalita said Dubai's property market is in a good place and will contiue to thrive, pointing to the recent announcement of a record UAE Federal budget for the next three years as a stimulus for the economy. He also referred to the recent statistics released by the Land Department that detailed the number of new investors in Dubai’s property market.
“This (Federal budget) has an impact – people are still investing and buying. The Land Department numbers show that there is 9,500 new investors in the last eight months – equivalent to the AED19 billion ($5bn) – 6,500 male, 3,000 female. All of this comes from the trust in the industry itself,” he said
RERA is talking to banks to make it easier for people to get on the property ladder, and Ghalita said “banks should be more cooperative in this sense, and should give more solutions, which they are doing”.
“On the other hand, the developers are being creative in financing their product. Most of the announcements and advertisements you see in the market, they go up to a ten-year payment plan,” he said.
“I keep telling them, to buy a property in Dubai is cheaper than buying a luxury car because of the payment plans, but in terms of assets, it has more value than a car. I think the developer is finding new ways of financing their projects by giving waivers for service charges, fees, and [offering] payment plans after competition.”For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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