I have commented recently on the impact of the global slowdown and how it is a "crisis of confidence". Rebuilding this confidence will take many different steps and transparency is one of the core necessities. But it cannot be achieved overnight.
While we deal with the global slowdown, the key challenge for us is to focus on strengthening the weaker pillars – of which transparency is one. After oil, real estate is the most important industry in the UAE and it is important to work on improving transparency in the sector. We need to raise our levels to those of other developed economies in the world so that we remain an attractive proposition for global investors. This will be the least they expect.
While the markets in the region are improving their real estate transparency, Dubai is striding towards the maturity curve much faster. Dubai has established a broad economic base, having pioneered the concept of free trade zones and creating a mature real estate market. Investment volumes in Dubai have increased dramatically since the freehold laws were introduced, which in turn has had a cascading effect on the overall business environments.
Since its creation, the Real Estate Regulatory Agency (Rera) has established itself firmly at the centre of the property market and has adopted a pivotal position that surpasses regulation and documentation and focuses on co-operating with master developers and government bodies. In a short time it has become an effective and well-respected organisation. It has introduced a system of guarantees and policies that ensure customers know that the money they are paying to a developer is being used in accordance with their contract and that they will be protected in the event of any problems. It has also moved to ensure clarity and consistency for developers.
Since 2006, 11 new laws have been introduced to enhance the stability and confidence in the Dubai real estate market. Specifically, the laws 13 and 14 governing off-plan property sales and mortgage procedures, which were issued recently, were major steps in raising the transparency in Dubai real estate sector and curtail speculation. Overall, Rera's contribution across multiple facets of the property sector has made Dubai a much reliable and transparent real estate marketplace.
But it is important to remember that transparency is not just the responsibility of the government; it is also driven by the local companies operating in the market. We welcome moves to improve transparency as we truly believe it benefits all involved in the real estate world – companies, developers, contractors, investors and of course most importantly of all, our customers.
The current market situation calls for a greater need for regulation and scrutiny to ensure that only credible developers enter the market. Boards need to be encouraged to discuss and disclose what they consider their risks to be as well as their approach in monitoring and managing those risks. This may represent a change to previous attitudes and procedures but in these days when rumour often presents itself as fact, isn't it better to opt for clarity and cohesion?
Beyond the real estate environment, we have seen the efforts of Dubai International Financial Centre to maintain a strong, reliable and supportive legal framework. Their proposed electronic transactions law is a case in example. S
In general terms, greater transparency equates to lower risks and increased certainty, which provides for informed decisions and increases the confidence in investment decisions. Most importantly, it gives us market information and a fair and efficient legal and regulatory code of conduct. This month, Rera said it would calculate rental prices for a range of properties across the city to control spiralling rents, so as to control inflation in the UAE. Similarly, Rera has made it mandatory for all mortgage contracts be registered with the Dubai Land Department to better regulate property and mortgage transactions. Through these developments, it is clear Dubai provides a remarkable example of how improvements in transparency have stimulated the local economy and stresses the need for more bodies like Rera to help create a vigilant, stable and secure real estate market.
- The author is Chief Executive Officer of Damac Properties