RERA says 90,000 real estate units ‘under review’

Projects will be cancelled if they don’t meet required standards, says RERA’s Marwan Bin Ghalaita
RERA says 90,000 real estate units ‘under review’
Dubai’s real estate watchdog is carrying out a financial review of about 90,000 real estate units due to be delivered over the next five years
By Shane McGinley
Thu 31 Mar 2011 01:30 PM

Dubai’s real estate watchdog is carrying out a financial
review of about 90,000 real estate units due to be delivered over the next five
years to assess their viability, its CEO said Wednesday.

“We are reviewing more than 90,000 units that will come to
the market from today to 2016,” Marwan Bin Ghalaita said on the sidelines of a
meeting in Dubai.

“Some people do not like the word cancelled, they keep
saying delayed, delayed, delayed. Sometimes we have to face the truth and if a
project is not good for Dubai then we have to admit and say it is cancelled.”

Ghalaita said on March 17 that Dubai had 220 residential
real estate projects ongoing this year.

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 collapse, included branded developments such
as Dubai Properties' Tiger Woods real estate project.

Ghalaita said Dubai had learned lessons from the crisis and
was now imposing stricter rules on developers in a bid to rebuild trust in the
emirate’s real estate market.

 “Let us not forget
the supply coming to the market is managed by us. Now we are getting tough on
supply and have added new requirements for anybody who is tackling developments
in Dubai, not only for sub developers but even for the master developers,” he
said.

RERA is focusing on specific issues including the quality
standards of real estate projects and whether developers maintain escrow accounts
for investor funds.

 “Previously people
who were promising to deliver high end [properties], it is not even middle
class so we are building in more controls before they start development in
Dubai,” he said. “We are reevaluating escrow accounts to make it more trustful
for investors.”

Ghalaita told Arabian Business in December AED2bn ($545m)
was missing from the escrow or trust accounts into which investors placed their
deposits, as developers had tapped funds to pay for construction costs.

For all the latest business 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.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.