Abu Dhabi's fledgling property market can learn from the measures Dubai has taken to fix past mistakes.
Abu Dhabi property market has a model
Construction delays, abandoned projects, lost revenues and variable quality. Dubai's property market is only recently emerging from the troubles of the last few years. And it is a cautionary tale for the property market in Abu Dhabi as it begins to mature.
As The National reported yesterday, property buyers in Abu Dhabi are starting to experience many of the same issues that have affected Dubai's market, with dozens filing lawsuits against developers over stalled or cancelled projects. Others complain that the costs, such as service charges, utility bills and maintenance fees, have skyrocketed since the contracts were signed.
"You would have thought Abu Dhabi would have learnt from the mistakes Dubai made," said Paul Preston, the managing director of Elysian Real Estate. "But that doesn't seem to be the case."
But it is not too late. Abu Dhabi's market remains relatively small; learning from other examples, especially the mechanisms established to solve disputes, will help it as it matures.
Over the past few years, when investors lost on failed projects, recourse was available in the Real Estate Regulatory Agency (Rera) and the Dubai International Financial Centre (DIFC) courts. Now with expanded legislative powers and jurisdiction, even companies not registered in DIFC can bring claims. Buyers have legal options to reclaim deposit fees, down payments and mortgage instalments on properties that in some cases were never completed.
Rera's mission to protect tenants from unreasonable rent hikes has also changed the rental market. The agency's implementation of the Strata Law, which in theory protect owners' rights through the formation of home associations, has also shifted the balance of power away from developers.
Abu Dhabi's property market does not need to copy Dubai's institutions exactly; the difference in the size of the markets, for example, argues for a more tailored approach. But amid the difficulty that Dubai's property sector has undergone since 2008, there is invaluable experience. Not least is that tenants and buyers need proper recourse in disputes with developers.