WHAT HAS CHANGED SINCE 2008 TO INSTILL CONFIDENCE?
Sound fundamentals, lessons learned driving market’s surge
Dubai is a young city that is growing exponentially. The emirate is already a leader on the world stage and the country’s visionary leadership is inspiring generations to expand their capacity for knowledge and innovation — it is a capacity that may well be limitless.
The Dubai property market has seen resurgence stronger than any other market in the world over the past year, with rising rental prices and valuations of property, especially at the luxury end of the market. With this increase in pricing is the return of many overseas investors. But what is bringing them back to Dubai? The first thought is the Expo 2020 victory — a huge success that will undoubtedly impact the growth of the city for many years to come. But the announcement came at the end of November and is still more than six years away. Prices were already on the rebound 18 months prior and the announcement was the icing on the cake.
One of the main factors driving the return is increased regulation and sound fundamentals. In the boom-and-bust era of 2008 the Dubai real estate market was in its infancy, just six years old. Since then, many lessons have been learnt by all parties and Dubai has come out the other side, stronger, more mature and able to compete with any real estate market of its ilk anywhere in the world.
Much of the legislation came in from 2012, led by the Real Estate Regulatory Authority, or Rera, starting with ensuring all lease contracts are registered through a centralised database, and that all transactions with the Dubai Land Department, or DLD, are processed centrally. Welcome regulation is also in place to ensure developers have all funding and documentation in place before being able to go the market with a new product.
At Damac Properties, we continually audit the real estate market and advise potential customers to check that any development they are interested in full complies with the latest legislation.
This includes asking to see the following four documents which are required of every developer: the title deed, the contract with a main contractor, Rera approval on the project and either 20 per cent funding in a dedicated escrow account or 20 per cent completion of the project build.
Investors should also ask to see the jointly-owned property declaration, which must be registered with the Rera.
Regulation breeds confidence and as the market began to return to more realistic prices, the DLD again came in to double the property registration fee to four per
There seems to be no slowing in the number of investors willing to move their property
cent from two per cent to encourage owners to keep hold of their property for the medium- to longterm.
There seems to be no slowing in the number of investors willing to move their property however. With real estate transactions in 2013 jumping more than 50 per cent compared to 2012 to reach Dh236 billion, only time will tell if the increase in the registration fee will achieve its goal.
Of that Dh236 billion, nearly half (Dh114 billion) came from foreign nationalities of 160 countries. Indian, British and Pakistani nationals more than doubled their investment in Dubai’s real estate market last year, investing Dh37 billion between them.
As the real estate market continues to mature and grow in Dubai clear industry standards, led by the Rera and DLD, will be the backbone to ensuring a lasting legacy of projects and infrastructure, which raises the emirate on the world stage as a global destination.