What’s in a Real Estate Store for 2012

The UAE real estate industry has been on a roller coaster ride for the last 5 years or so. Amazing boom-times followed by a massive crash in 2008. Since the crash, there remains uncertainty on the future of the real estate industry in the Emirates and the deliberation continues on how best to steer the economy along the path of recovery.

According to the National newspaper, property in the UAE has lost Dh734 billion (US$199.9bn) in value since the market peaked in 2008 (Shuaa Capital estimates). Capital values continue to decline in of Dubai’s tertiary areas, but most of the city’s prime locations do show signs of stability due to restricted supply, and buoyant demand.

A few things seem to be on the cards next year that may help uplift the real estate market in the country. As written in the Gulf News, the real estate community in Abu Dhabi is expecting the most significant piece of real estate legislation to be issued since it introduced its first real estate laws in 2005. The much anticipated real estate law is expected to introduce measures to support the real estate development market, particularly in the investment zones such as Saadiyat Island, Reem Island and Al Raha Beach.

In Dubai, a new visa rule that will allow foreign investors who own properties worth more than Dh 1 million to be entitled to three-year multiple-entry visit visa is something that may really woo real estate investors as their entry-and-exit to and from the city becomes more flexible.

Moving forward, the Real Estate Regulatory Authority (RERA), the regulatory arm of Land Department in Dubai, will impose an administrative fine of Dh50,000 against firms that commit violations against its policies and will take legal action against these entities if they do not follow RERA’s conditions and laws. In addition, recent news tells us that RERA has accredited 22 auditing firms and bureaus to conduct financial auditing of real estate projects registered with RERA. This is to boost the adoption of good governance measures for the real estate sector and enhance transparency, thus strengthening investors’ confidence in the real estate sector.

Sharjah’s Real Estate Registration Department (RERD) has just issued a new decree where developers must register all projects with the department before implementation. In addition, developers will be licensed for marketing and selling of real estate units and must submit guarantees from a bank operating in the country. The resolution also stipulates that a developer is not allowed to begin marketing and selling of real estate units until the submission of bank guarantee.

In terms of protection of rights of all parties in any real estate transaction with a broker, all these are great steps towards encouraging people to invest in real estate in this market.

All in all, the real estate market in the UAE appears to have bottomed out. However, significant progress has been made in restructuring and in governance within the industry, steps that are encouraging for the industry’s recovery. They say that a key catalyst of the projected solid growth in 2012 is the expected turnaround in the real estate market. Let’s keep our fingers crossed!

Happy New Year.

Kabir Mulchandani

About Author: Kabir Mulchandani is a CEO of Skai Holdings Dubai, a real estate development & investment company. http://skaiholdings.com