Guarantee must: Rera CEO

Dubai developers take note: The chief of Real Estate Regulatory Agency (Rera) isn’t likely to take it easy this time if you fail to complete your project on time.

Marwan bin Ghalita, CEO, Rera, says sales isn’t his worry – developers can sell it over the years - but they have to guarantee that the project will be completed on time.

“No project in Dubai is launched without a construction guarantee. Developers have to give a 20 per cent construction guarantee and make 100 per cent land payment,” Ghalita said on Monday after inaugurating Deyaar Development’s new branch in Business Bay.

In response to a question from Emirates 24|7 on how some developers were still selling “off plan” without even starting construction, Rera CEO clarified: “They have already put a 20 per cent guarantee as collateral or they are not allowed to use money from the trust account until 30 per cent of construction is reached.”

Rera, the regulatory arm of Dubai Land Department (DLD), move is aimed to ensure that developers no longer depend on investor money like before.

During the property boom days, developers were selling off plan and were using investor money to construction the project. But their projects got stalled when investors failed to pay affected by the global economic slowdown.

“We now ensure they [developers] have to provide 20 per cent guarantee from their own pocket. Besides, the mechanism of trust account is more tight… there is no marketing or commission disbursed from account.”

Demand driving projects

Ghalita said projects were coming back, as there was demand.

“There is demand and that is why the projects are coming back. The project can be sold in four to six years, but construction should be on time and the fund for construction should be available,” he reiterated.

In January, this website reported quoting Dubai government’s new bond prospectus that the number “on hold” projects in Dubai had declined to 253 by end of December 2012 from 291 reported in March 2012, with 22 projects having completed in the last nine months of 2012.

In the base prospectus, released on January 17, Rera said 187 projects have been completed since the beginning of 2009; 253 projects are on hold; 232 projects are likely to be completed in due course. Each of these 253 registered projects is likely to qualify for either the Tayseer or the Tanmia initiative.
The above schemes aim at restarting stalled projects through bank funding and public-private partnership.

DLD figure reveals total value of real estate transactions rose 63 per cent to Dh44 billion in first quarter 2013.

A recent report by Deutsche Bank said property prices in Dubai saw a 6.2 per cent growth in the first three months of 2013, though apartment prices remain between 43 and 61 per cent below peak prices.

Knight Frank, a global property consultant, said property prices in Dubai rose 18.3 per cent in the past one year (March 2012 to March 2013), with the emirate maintaining its position among the top five best performing real estate markets in the world.

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