By Shane McGinley
Projects will be cancelled if they don’t meet required standards, says RERA’s Marwan Bin Ghalaita
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
RERA is focusing on specific issues including the quality
standards of real estate projects and whether developers maintain escrow accounts
for investor funds.
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
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.
RERA is promising again things. It would be good if RERA could keep their focus on errant developers who have, so far not complied with any of the Laws already in place. That will give a strong positive signal to investors.
Again, no clarification of what a canceled project means for investors.....will we get our money back and if developers have squandered the money where will it come from.
Obviously developers do not want to have their projects tagged as 'cancelled' because they have to return any advance payments received to the original investors.
On the basis that as of December 2010 AED2bn ($545m) of investors money was missing from the escrow or trust accounts set up as a safety net, cancelling a large number of projects which are deemed financially unviable will only increase that total. If they are found to meet the criteria for cancellation as having insufficient funding to deliver then presumably the associated escrow account is underfunded?
As there is apparently no chance of retrieving the missing $545m and that figure must amount to a seriously large group of misled investors, then confidence in the property market is hardly going to improve any time soon. Especially with a new wave of project cancellations pending.
Perhaps 2016 is an indication of a real market start again milestone?
"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."
Again, which gov agency is responsible for this? Can we trust RERA to get the builders to pay us our deposits back for cancelled projects?
If RERA is not watching their own bank account then who is watching RERA? Who is watching for our rights and where is our money?
Rera is out there to only put laws and rules that are never implemented or enforced. The only time the laws are enforced or implemented when in favour of the developer. the laws in place are to protect the devolpers specially the goverment or the semi-goverment developers.
As for investors like myself who has invested in Deyaar the real estate arm of Dubai Islamic Bank (majority share owned by Dubai Goverment), we have now no clue what deyaar is doing with our money that has been with them for three years now on the cancelled Downtown Jabel Ali Project. Deyaar is not admitting to the cancellation of the project; why? its clear!! so they don't return the money to investors, and RERA is watching from a distance.
where are the laws here to protect us as investors to get our money back.
A great news from RERA is a step forward to a promising journey for the small investors who put in their lifetime savings to have a Roof of their own in this beautiful country. We hope a have a quick solution to the common man's problems.
It clear that RERA like many other institutions in Dubai needs credibility. Once you remove the smoke screen the fact remains if you have purchased a unit and the developer has delayed, you have no recourse except paying the interest to the bank and reading toothless articles. Until such time Dubai brings about laws that will be in par with most of the developed world, the Dubai real estate market is a serious risk. I sincerely hope Dubai will get credibility sooner than later if its to be a modern sophisticated city that it can be. Kash Gunn Australia
I think its clear to all that there is no cash left in these Escrow accounts. As soon as one investor wins his deposit back, there will be a bank run ...which Dubai cannot afford. Rera will keep delaying until they know Dubai can afford to pay...if it ever will. So Rera is just a smoke screen.
why emaar not refunding boulevard 29 funds as hand over date was march 2010 .........hope rera helps investors .....
Of Course there will be no proper clarifications. They still dont know what step they are going to take. Most of the developers will get off without anything, a few who are on bad terms with authorities or maybe more than a few will get penalized and the bottom line for the majority of investors? Oh we're sorry, mistakes were made but now we have learnt from them (While we made billions on the poor middle income familes)and while "SOME" may get their money back, most of them will not. The problem is that unfortunately people were silly enough to gamble on their savings just because everyone else was doing it too.
Without a good foundation a structure cannot be built. Here they are trying to fix a structure where the foundation is not even close to being anything which can be called quality. The structure will come down at the end of the day. People should realise and cut their losses and move on. All this hope of something positive is another mistake.