By Shane McGinley
New rules will see RERA vet firms advertising overseas properties to Dubai investors
A Dubai firm has won permission to advertise a development in Brazil to investors in the emirate, under new rules rolled out by the city’s real estate watchdog to vet foreign projects.
Real estate agency BRIC Group is the first to secure approval under laws aimed at regulating firms advertising to Dubai-based investors, said RERA CEO Marwan bin Ghalaita.
The agency requires companies to provide proof of ownership, masterplan designs and proof of licensing, signed by the UAE embassy in the respective country, to secure approval.
Sam Rodgers, regional director of BRIC Group, said approval had boosted interest in its Brazilian project, which offers units starting from $32,000.
“It has made a difference,” he said. “It is a big jump as RERA is a big word in this part of the world.”
Rodgers said some Dubai firms had already been fined up to AED50,000 for advertising foreign developments without approval.
Bin Ghalaita said the stamp did not mean RERA had endorsed the project, but that it had confirmed the company was a registered real estate agent approved to advertise units in Dubai.
Dubai’s real estate watchdog has moved to crackdown on developers in the wake of a property collapse that saw house prices more than halve from their 2008-peak.
RERA said in March that up to 90,0000 real estate units due to be delivered over the next five years could be scrapped if the projects failed to meet financial viability rules.
Analysts said new rules monitoring companies advertising foreign developments would give confidence to investors, but hoped it would not divert attention from local issues.
“My main concern here would be that if RERA is endorsing projects overseas, this will divert investors to invest outside Dubai,” said Priyesh Patel from Dubai-based brokerage Aston Pearl Real Estate. “In the current climate, just as the property market is recovering [in certain prime areas], we need investors to keep investing here not aboard.
“RERA should focus on issues in Dubai.”
An Arabian Business poll of analysts this month found house prices in Dubai are expected to slide a further 15 percent by the end of 2011 as fresh supply floods the market.
Many foreign would be real estate investor are turned off by the sharia restricted inheritance laws of U.A.E.
Implementing a free inheritance laws, regardless of the nationality and religion of the investor, which would be transparent, and easy to establish shall be an extremely important step in encouraging and reducing the cost of foreign investment, while it would not cost or have any negative side effects in U.A.E.
Instead of putting engery into foreign property regulation of any sorts RERA should be concentrating on sorting out the Dubai property market first and regulating the Dubai developers. As one of the unfortunate people who bought off plan in 2007 I still find myself waiting 4 years later for my property to be completed, 2 years late. Despite a contract with a 2009 completion date RERA do nothing to protect me, they don't enforce any penalties on the developers for late delivery or provide investor compensation, and instead we just have to sit and wait....RERAs answer to this is take the developer to court....with what money am i supposed to do that exactly given any spare money i have is being put into renting a different property as the one I bought is still not finished.
I appreciate the points raised in your comments that would especially benefit a large number of foreign property owners regardless of nationality and religion.
The concerned authorities may please consider the above points in respect of inheritance laws for expat investors.
â€œMy main concern here would be that if RERA is endorsing projects overseas, this will divert investors to invest outside Dubai.â€
We need to understand that this works both ways â€“ if people are investing outside it would still result in an influx of funds through high returns earned by UAE investors who have invested in foreign property. It is more than likely to result in increased consumer spending.
Itâ€™s good that RERA is adopting this new approach. In the long run it would give more structure to the Dubai Real Estate market, because agencies dealing with foreign properties will eventually need the approval.
Yes I agree with you.
RERA were only given true authority in the market in 2009/2010. They are a new body and most countries dont have any regulations. RERA is a good thing, but agreed there is huge room for improvement.
I think the point here is they dont want history repeating itself and they are now checking paperwork.
I for one am glad that measures are in place to stop foreign developers pentrating this market in a way that can damage all of us investors, big or small.
It appears as though RERA are now checking and attesting all documents relating to these projects. Surely thats a positive?
RERA should not have approve anything outside UAE where they have no real power to protect investors, instead they should try to build investors trust by putting things right in Dubai first which they have failed to do for years. Many of us as investors put lot of trust on RERA during 2007 and so on, but many property dealers and developers with RERA approval has let us down completely and RERA is not safeguarding investors interest as the way it should instead they are asking us to go to Court to pay more and more in this uncertain recovery drama. I hope RERA is a strong name by taking some responsibility and by compensating investors in near future, so we can depend then lot of investors will feel like coming back with bit confidence!
This is a great step forward in making safe investments. Its good to know that BRIC has done this correctly and shown they are a responsible company to deal with. Who would I rather invest my funds with, a company that can evidence what they are selling or a company who just says they can?
Note there's no mention of a guarantee that any of these overseas developments are ever going to get built, although that's also true of Dubai apart from future projects backed by the Tayseer scheme and guranteed by the government.
Talking of which, does Nakheel's reinstated Jumeirah Circle project fall under the Tayseer Guarantee?
Double talking of which, what has happened to the Tayseer initiative? Very low news profile of late?
The incredibly low comparative pricing of properties being advertised in other parts of the world also serves to put even greater downward pressure on Dubai's property value proposition. The lower the property prices advertised in Dubai available in other 'sun, sea and sand' jurisdictions, the more prices will fall locally.