Property developers in Dubai will be ranked by financial stability and market experience under a system to be introduced by the Dubai Real Estate Regulatory Authority (Rera) this year.
Dubai to rank developers
Property developers in Dubai will be ranked by financial stability and market experience under a system to be introduced by the Dubai Real Estate Regulatory Authority (Rera) this year. It will be followed by a regulation requiring developers registering off-plan projects to fully own the land first. The ranking system is an attempt to reduce the number of developers, give Rera greater control and reinforce investor confidence in a sector hit by falling prices, fraud and contractual disputes.
"We're evaluating all of the developers in Dubai," said Marwan bin Ghalita, the chief executive of Rera."All will be graded according to their financial liquidity, their experience in the market, the number of projects and the added value they give to the community. "So before people invest in a project, they will see what the rating of the developer is and will be able to base their decision on that."
During Dubai's explosive property growth in the past six years, the number of developers has risen above 100. Investor confidence in off-plan projects has been harmed by several cases of developers failing to go ahead with projects or not to delivering on promises, especially projects launched before Rera was established in 2007. Last year several high-ranking Dubai property executives and financiers were removed from office and arrested on fraud charges.
Mr Ghalita said the number of developers in the emirate needed to be reduced to a more manageable level. "There are too many of them," he said. "We need to make the number smaller so we can control them more and they can serve the market better. At the moment we're working on this to find the exact number that's required." Mr Ghalita announced the planned regulation demanding that off-plan developers fully own land before building on it.
"Previously you could develop land you didn't own but the new rules will say the developer must own the land 100 per cent before they start developing, and the land should also be ready for construction," Mr Ghalita said. He said that since the global financial crisis hit Dubai's property sector, about 25 developers have cancelled plans for projects. "They said market conditions were not good and so decided not to go ahead with the off-plan sales, which is a wise move. ... The previous mechanism of just selling and injecting money from sales back into new projects isn't there any more." He said only companies with a strong sense for the market and its feasibility would survive the downturn.
Rera's plans for the year also include trying to ensure that new projects contribute to Dubai's social, as well as economic development. "It's not only about making money and building fancy projects," Mr Ghalita said. "It's about adding value to people's life and how the sector contributes to the social development of Dubai." Last week Rera announced a regulation, drawn up with the Department of Economic Development, banning freelance property agents from operating in Dubai to improve transparency for property owners and tenants.
Any broker who wants to set up business will have to be over the age of 18 and obtain a good-conduct certificate from Dubai Police. Brokers also will have to take a Rera training course. firstname.lastname@example.org