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THE REAL ESTATE REGULATORY AUTHORITY IN DUBAI REVEALS SCHEME TO SOOTHE REAL ESTATE MARKET

Tuesday, 13 Jan 2009

A flurry of statements from Dubai’s Real Estate Regulatory Authority provides new guidelines to aid in the pacification of the current mayhem in Dubai’s property market. These include indexes of rentals, developer grades and plans for new payment options. While there have been no legislative determinations as yet on the matter, RERA has informed Dubai property developers that people who purchase property should not pay any more than 20 percent of the property value in their first down payment.

They would then pay the rest in instalments, according to the project’s construction progress and in keeping with the advancement of the building’s completion. In the cases where there have been payments already made in excess of these figures, and the building’s constructions has not yet begun, investors may be able to withhold future payments until the development of the property in Dubai has started, although it is advisable to seek advice on particular cases.

While the new guidelines do not bind developers legally, they will be eager to comply with RERA. The legal firm of Clyde and Co.’s partner, Alexis Waller, said, “The companies will want to work with the RERA and keep them onside. These letters have been going out for a while, since November, but they are guidelines rather than law. The money is in escrow accounts, not with the developers, so the buyers are protected anyway.”

RERA has set up an eleven-member Real Estate Development Trust Account Department to keep a close watch on how escrow amounts are used, and to make certain that any amount over 20 percent is not paid until the construction of the property in Dubai has begun. In conjunction with this, RERA is creating a real estate listing system that will make it possible for would-be investors looking to buy into Dubai’s accommodation market to check the credentials of the various developers in Dubai.