Opinion | Editorials
Off-plan sale needs to be curbed
Such practices are unprofessional and should not be allowed.
- Gulf News
- Published: 23:44 August 28, 2008
A clampdown on illegal off-plan sales of properties couldn't have come at a better time. The move by the Dubai Government, which comes amid a crackdown on corruption in the real estate sector, will help bring discipline in the market and help boost investor confidence and reduce the chances of malpractice.
The off-plan sale of property is a global practice. New properties are usually sold off-plan - before the construction of the projects begins. Developers spend the investors' money in the construction of the projects and deliver it to the end-user on time. However, the problem in Dubai and other states is, some developers have stretched the scope of off-plan to an unacceptable limit which has had to be corrected.
A large number of developers has been selling 'promises', 'papers' and 'artist's impressions' even before the project received permissions from relevant authorities. Due to strong demand, many investors have been paying the initial deposits and follow-up installments, much before land is handed over to the developers for construction. A portion of this investor's money is then channelled by the developers into other projects and in some cases other business activities without the knowledge of the investors.
Such practices are unprofessional and should not be allowed. These activities, which are giving the country a bad name, should be strictly monitored by the authorities. The investors should have wider and easier access to the authorities to lodge complaints and seek remedies. Dubai's Real Estate Regulatory Agency (RERA) recently settled an issue in which it had brokered a deal to fast-track a residential project which was running way behind schedule.
The UAE, as a whole, needs to clamp down on illegal off-plan sales, either by binding the developers to first registering the project with relevant authorities upon receiving the land site or after opening an escrow account with a written pledge to deliver on time.
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