Dubai: The announcement of a judicial committee to oversee the liquidation of cancelled real estate projects in Dubai is good news for investors.

The announcement came on Monday by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.

The committee will offer settlements after the liquidation expenses are deducted.

Experts and businesses remarked that all stakeholders in the real estate market will benefit from the liquidation and settlement of the cancelled projects in the market. They describe this initiative as an essential to clean up the market.

Several mega-projects across Dubai such as Nakheel’s Palm Deira, Palm Jebel Ali and the World, were sold to investors but later stalled.

Sultan Bin Butti Bin Mejrin, Director General of the Dubai Land Department, said that only projects that has been cancelled officially will come under the purview of liquidation. “Delayed projects will not be handled by the new committee since they have not been officially scrapped.”

Experts estimate the number of cancelled projects in the range of 60 to 70. Bin Mejrin said that the crash in the UAE property market during the financial crisis in 2009 and 2010, forced developers to shelve or scrap number of projects.

“The department has cancelled many real estate projects that failed to fulfill the contract. However, the cancellations were made after giving investors three notices with six month period each,” said Bin Mejrin. He said some developers who had valid excuses were given more time.

The Land Department gives developers 60 days grace period to pay back the investors. If developers failed to pay the case will be sent to the assigned committee at the Dubai Courts to review and take action.

Hani Al Hamli, Secretary General of the Dubai Economic Council, said: “This initiative is of great importance for Dubai from both economic and legal perspectives. The decree would sustain the construction and real estate sectors in Dubai. The two sectors account about 20 per cent of Dubai’s GDP.”

Property consultants said investors that have lost funds from cancelled projects will benefit greatly from the judicial panel.

“It will benefit any investor that has invested money in a project and has not received compensation for the loss of investments. It will create a forum for investors and developers to come to an agreement on the compensation for cancelled projects,” said Mat Green, head of research for the UAE at CBRE Middle East.

Hamsa Shetty, an investor from Ajman, said the panel will help investors “in spite of liquidation charges.”

“It is great news for people who have been waiting for their money,” she added.

However, Craig Plumb, head of research at Jones Lang LaSalle for Mena, said although the committee is meant to speed up and simply the process of liquidation as there is one panel to hear all of the disputes, it “would involve delays.”

Plumb explained that those that have previously taken their matter to the courts “now have to stop and go to this new panel and start all over again.”

Meanwhile, the committee will help boost investments in Dubai and strengthen confidence in the market.

“It’s going to improve confidence of the regulation of the market. If projects have not gone ahead there is a recourse for them — that sends a message that the market is starting to mature, and issues are starting to be looked at,” Green said.

Simon Gray, managing director at Chesterton International for Mena, said with this panel, “Dubai will demonstrate to the business community that it can put itself in order and bring in regulation and guidelines to encourage investments.”

According to Plumb, the committee could encourage investors that have lost funds from cancelled projects to invest again after being compensated.

“They will be more positive about investing in the future,” he said.

While it is unclear which properties will be overseen by the committee, Green assumes these “would be projects that haven’t started construction.”

“I think partly developed projects would be difficult for compensation due to funds been spent,” he added.

Gray said that the panel will “tackle whole blocks of residential and commercial buildings that have been cancelled.”

Additionally, Plumb said there is more information that needs to be clarified in order to know if the committee will be impactful. “We don’t know the time frame over which this body will release its results, whether it’s published or not,” he said, adding that the publication of results will increase confidence in the market as “investors would have more clarity on what’s cancelled and what’s not.”

Mohannad Al Wadiya, managing director of Harbor Real Estate, said: This initiative goes in line with all effects to regulate and set up healthy infrastructure for real estate industry. “All stakeholders including buyers, sellers and tenants will benefit from this initiative. Moreover, this move will be add value to Dubai reputation.”