Dubai’s real estate developer and industry analysts are widely praising the emirate’s establishment earlier this month of a new Higher Committee of Real Estate, calling it a vital move to regulating the market and establishing a sustainable balance between supply and demand.
Announced by UAE Prime Minister and Vice President and Dubai Ruler Sheikh Mohammed bin Rashid Al Maktoum, the committee – which is chaired by Dubai Deputy Ruler Sheikh Maktoum Mohammed bin Rashid Al Maktoum – includes senior representatives of major property developers among its members and aims to avoid duplication of projects in the sector.
Speaking at this week’s Cityscape in Dubai, Steven Morgan, the CEO of real estate advisor Savills, said he believes the new entity is best described as a “planning authority” that will bring in much needed supervision to Dubai’s real estate market.
“To date, we’ve had no real control over supply coming into the market. Any developer can buy a piece of land, and there’s very little control over how much stock comes into the market,” he said. “That’s not the case in most developed, mature markets.”
In other markets and sectors – such as F&B – Morgan noted that governments often use licenses to control who can gain entry into the market. These checks and balances, he said, have been lagging behind in Dubai.
“I think the Dubai government and RERA [the Real Estate Regulatory Agency] have always been very much of the opinion that they’ll let the market find its own base and its own demand and supply. I think that’s a bit ambitious,” he added. “It’s good to have a planning authority that lets the city grow in the way that we want it to, and control the supply that comes online. That will make it healthier.”
Similarly, Farhad Azizi, the CEO of Azizi Developments, told Arabian Business that he believes that tight market regulations on the real estate sector have proved their worth in other developed markets, such as Germany.
“It stabilises the market. As a developer, I feel very comfortable because I know somebody has checked whether there is a need, for example, for me to launch a 100-unit project,” he said. “I know the demand will come naturally, because someone in a higher authority has checked it.”
Additionally, Azizi said that he believes one of the main benefits of the committee will be the fact that it possesses market intelligence that is not readily available to private companies.
“As a developer, I don’t have all the data about how many people live in a certain neighbourhood, because of privacy [concerns],” he said. “What if I launch a building in the middle of nowhere, and I sell it out, but there is nothing there? People can’t live there and will leave eventually, so the money is wasted on steel and concrete.”
Azizi added that he believes the entity was “much needed.”
“It should have been there a long time ago. RERA and the DLD [Dubai Land Department] have been doing a lot of this already, but there needs to be more. The supply has to be controlled,” he said. “We can’t let any Tom, Dick or Harry come and take this up.”
PNC Menon, the founder and chairman of Sobha, noted that while many developers still lack clarity on the actual day-to-day workings of the committee, he believes it will soon begin bearing fruit.
“We have to see exactly what the outcome will be, but whatever the government does here, it is generally helpful. We are anxiously waiting,” he said. “The government’s people are going to be involved, along with people from the industry. I have no idea how long it’s going to take, but here things move very fast.”
Although the committee was established less than a month ago, Dubai officials have already said that it has led to immediate – and positive – results. In a keynote speech at the Cityscape Global Conference, DLD director general Sultan Butti bin Mejren said that since the announcement there has been an 134 percent increase in property transactions.
“This highlights the renewed confidence in Dubai’s property sector,” he said.
Majida Ali Rashid, the CEO of the DLD’s Promotion and Real Estate Investment Management Sector, said that the committee’s top priority remains on maintaining what he termed “an increasingly balanced sector.”
“We have achieved a total value of more than AED 1.4 trillion through 715,000 accumulative investments and 374,000 accumulative investors,” Rashid said. “In 2019 to date, we’ve seen a value of investments of more than AED 56 billion across 31,000 investments by 23,000 investors.”
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