In the 40 years since the formation of the United Arab Emirates, the nation's real estate sector has emerged as a key driver of growth.
And in this 40th Anniversary Year, the UAE government and real estate market regulators in Dubai have been active in restoring confidence among property investors.
An important step taken this year was in June when the UAE federal government extended visa for real estate investors from six months to three years. Experts and developers believe the move will instill confidence and help in recovery of the property market.
Another highlight is Dubai’s plan to introduce the Real Estate Investor Protection Law.
“We have appointed a consultant to review and finalise the law. We expect it to be issued by the year-end,” Sultan bin Butti bin Mejrin, director-general, Dubai Land Department, told Emirates 24/7.
The new law is expected to provide clarity on various issues such as steps that an investor can take in case of project delays, how an investor can cancel the contract if the developer fails to fulfill his contractual obligation, etc.
In October, the Dubai Land Department introduced the Code for Corporate Governance, which it plans to implement in totality from 2013. The code will make it mandatory for all developers to disclose recourse and alternatives available for prospective investors in case of a delay in completion and handover of their property. It will also ensure that companies inform their investors of various options such as swaps or refunds in case of project delays.
All developers will have to appoint a dedicated investor relations officer who will deal with enquiries of institutional and individual property investors.
Dubai has also introduced the Tanmia initiative, which will help complete stalled projects over a period of three to four years. A technical consultant has been appointed to review the projects.
The Institute of International Finance (IIF) recently said that the real estate market in the UAE appears to have bottomed out.
“The real estate market in the UAE appears to have bottomed out and significant progress has been made in corporate restructuring and in governance. The main catalyst of the projected solid growth next year is the expected turnaround in the real estate market,” the Washington-based institute said.
Residential prices in Dubai and Abu Dhabi have dropped by about 60 per cent and 50 per cent respectively since their peak in 2008. IIF says data for the first three quarters of 2011 suggests that the market may have reached its bottom.
Rasmala Investments, however, believes prices will continue to go down.
“We expect another 20-30 per cent decline in the next two years as supply will likely erode market values. We don't expect very robust asset price inflation in any one market in the foreseeable future," senior real estate analyst Saud Masud told this website.