Since the setback in Dubai’s real estate market, precipitated by the global downturn, much disappointment has been voiced about the workings of Dubai's real estate market and its ability to respond. The criticism has revolved around an apparent lack of regulations and transparency, post-crisis as much as pre-crisis.
While the overall sentiment is understandable, it is important to put things in perspective. Many new regulations have been passed, with many more announced for the future. Few countries can boast such a quick turnaround in their legislative process and it is important to give credit where credit is due.
It started back in 2007. Realising the need to regulate the unprecedented growth of its real estate market, Dubai began to rapidly introduce a series of legislation. The intended effect of these regulations was, among other things, to understand the true state of the market. Both investors and the regulators alike needed to know what off-plan projects were being launched, what sales were taking place, who was selling and how money was being spent. Laws were introduced requiring that all projects are registered with the Real Estate Regulatory Agency (Rera), developers are approved by Rera, sales contracts are registered with Rera, and that money is deposited into escrow. Regulations requiring payment plans to be linked to construction and approved by Rera followed shortly afterwards.
Changes continued after the downturn in the real estate market. Management of many of the biggest developers was swiftly restructured, with subsequent restructuring ongoing today. A specialised Property Court was introduced. Although, in practice, the Property Court is part of the same Dubai Courts and its effectiveness is subject to debate, the intention was to have a dedicated set of judges to deal with property cases.
A series of regulations by Rera are also noteworthy. One example is Rera's system of tracking construction progress of projects in Dubai. While it is unclear how comprehensive this system is, it does serve as a useful resource.
Another example is Rera's recent announcement that it has completed surveying the majority of projects and, on that basis, has cancelled 250 projects. Although the list of these projects is yet to be published, if at all, the move is positive. Then there is Rera's Tayseer programme to pair up approved developers with banks to fund the completion of projects. Equally important is Rera's recent regulation requiring real estate agents and brokerage companies to be licensed by and registered with Rera. Today, Rera has become more approachable. It has also been active in the formation of owners' associations, working with developers and associations. Although that process is still ongoing and much delayed, its activism and openness are encouraging.