Slowdown helps better define legal issues

Slowdown in the real estate sector has given Dubai an opportunity to consolidate its property regulations and legal framework, according to a consultancy firm.

"The property market has managed to use the positive attributes of the global recession to its advantage, which has resulted among others, in the decline of speculators in the market. It has also brought more clarity on regulations and helped better define the legal framework regarding real estate issues. The last six months was a challenging period, and one that has not been tackled by the market before. On the other hand, it has allowed us to expand our understanding of market dynamics, which will lead to better judgement in the future," said Iseeb Rehman, Managing Director, Sherwoods Independent Property Consultant.

Sherwoods said at the height of the economic downturn during the first half of 2009, Dubai's property sector has been able to stay in relatively good condition because of the significant reduction in the number of speculators in the market. The company said the Dubai's real estate market is set to stabilise and see growth in prices and real estate investments from end of 2009.

"I would say that the prices have been corrected to reasonable levels, which has created more value offerings to buyers and investors. The positive signs we are seeing should result in more tangible proof of growth about the fourth quarter of 2009, during which property prices will further stabilise and we can also expect a marked increase in property investment," said Rehman.

"Furthermore, 2010 should be a year of stabilisation and direction as Dubai transitions into a more stable and robust market for property investments. Prices available today are conducive for long-term investment and should make good profit in the long term."

Sherwoods said Real Estate Regulatory Agency will have a critical role in boosting the confidence of consumers and investors in the real estate sector in Dubai.

Earlier this week, analysts told Emirates Business that the real estate sector in Dubai is set to enter a phase of "relative stability". The analysts said the possibility of drastic falls in the real estate prices had declined and that the pace of home price falls appeared to have slowed, if not stalled. The analysts, however, said volatility was expected to affect completed properties for the rest of the year.

Another report by Standard Chartered said the real estate sector is set to stabilise as mortgages become easier to obtain.

"The end of the freefall is encouraging. The first signs of stabilisation in Dubai's real estate sector have appeared, taking observers by surprise since further declines were expected. Some caution is warranted, as there are still question marks surrounding population flows," said Philippe Dauba-Pantanacce, a senior economist at Standard Chartered.

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