The accounts of several major property developers have been frozen until they can prove that construction is progressing and the land has been properly registered.
Rera freezes accounts of several developers
DUBAI // The trust accounts of several major property developers have been frozen until they can prove that construction is progressing and the land has been properly registered, officials said yesterday. The Dubai Real Estate Regulatory Authority (Rera) has frozen the escrow accounts in an effort to protect investors' interests as the property market grapples with falling prices and a shortage of lending. By law, all money made from the sale of off-plan property must go into an escrow account, to be used solely for the construction of the property.
Marwan bin Ghalita, the chief executive of Rera, said the developers in question needed to provide technical reports detailing the progress of construction before they could withdraw money from the accounts. "There can be no withdrawal until they have completed the technical report," he said. "Payment needs to be linked to construction progress. "They also need to prove to Rera that they have registered investors' rights with the Land Department."
Mr bin Ghalita would not say how many accounts had been frozen. In February, Rera introduced the Independent Progress Monitoring Report, a system whereby government engineers tour residential construction sites to check on the progress being made. The information is updated online each month, allowing investors to see whether construction on their homes is progressing or has been delayed or cancelled.
A committee made up of officials from Rera and the Land Department was recently set up to review all projects. Under a new law, the committee has the right to cancel projects that do not start construction within six months of being approved by the Government. Earlier this month, Mr bin Ghalita said the committee was considering cancelling 27 projects and that a decision would be made at the end of this month.
However, he said yesterday that it was "waiting for the regulation to be finalised" and that "no projects have been cancelled" as yet. He added that Rera had so far reviewed the progress of about 300 projects. "Within a month we will have a clear picture of all the projects under construction," he said. With the number of property disputes rising, Mr bin Ghalita called on developers to communicate better with their customers.
"The communication between the developer and the investor is still weak," he said. "In a situation like this you need more communication, as everyone is worried." firstname.lastname@example.org