Dubai: Hundreds of construction projects in the city, totalling up to 90,000 units, are facing cancellation and government scrutiny to stop property prices from plummeting further, a top property regulator said.
In an exclusive interview with XPRESS, Marwan Ahmad Bin Galita, CEO of the Real Estate Regulatory Agency, Director of Customer Relations at the Dubai Land Department, said the review of real estate developments is currently underway, assessing the status of these Rera-approved projects.
Bin Galita said 257 projects are under Rera's review, many of which have yet to even start construction. The scrutiny is unprecedented in New Dubai, where the landscape is dotted by unfinished, delayed buildings.
This latest move follows the cancellation of 202 projects from 2008. Bin Galita hoped the results of the review would be known by year-end.
Bin Galita's team is also looking into the ability of contractors and developers to deliver work. "New measures to move these developments forward are also being looked at, like the ability of the contractor or developer and the percentage of investors who have already invested in the development."
The review report would also look into the developer's reputation and experience, while delving into the dirty side of businesses — fraud and bankruptcy — and how it was dealt with by these companies.
"They should have a good auditing system. They should have some measures in place to deal with fraud or misuse of money. They should audit both stakeholders and themselves."
However he clarified that the 200-odd projects currently underway and completed by 2016, are not under review. "We learnt a lot from the crisis. You cannot repeat the same mistakes; you cannot let these developers repeat the same mistakes they did before," he said, explaining the need for the review.
"If developers don't have enough money to start construction or if they don't have experience or enough knowledge in real estate development, then they should not start the project. We are saving them, the industry and the business environment."
Bin Galita was dismissive of reports of property oversupply in Dubai. For example, he said, there are 90,000 units in the projects currently under review.
He declined to specify the location of the projects. Many of these 90,000 units under review would be delayed before they hit the market, he said, adding that many oversupply figures are exaggerated and are yet to be seen in the market. "Personally speaking, I don't see that much of it and we can control it. We are controlling supply," he added.
Once projects are cancelled, a lot of behind-the-scenes work would crop up. Any work that has been done on canned projects needs to be removed, clearing the site of all remains, he said.
A closer look at the Rera initiative
A dedicated Rera team is midway through picking over hundreds of Dubai developments currently under review.
Site visits by staff engineers and officials of a private company under contract with Rera have already taken place. Technical reports on these projects' infrastructure and progress have also been submitted.
"Site progress, time required for construction, percentage of construction completed plus the site's infrastructure status, have all been looked into," Bin Galita said. The staff have started checking financial records and assessing what percentage of investors' money has gone into the project and how much the developers have spent on purchasing land and construction.
"We have the financial report of the trust accounts, how much money has been collected from investors, how much has been paid for the land and for construction," Bin Galita said.