Investors reveal biggest concerns

A recent survey of real estate investors in Dubai found that the major cause for concern when buying property was trust and security. In fact, over half of all of the people questioned, highlighted this as their primary fear.

These results are not all that surprising considering the high values involved with real estate transactions. It is appropriate that people err on the side of caution as Dubai is still a relatively new market in which there are many areas of concern.

The same survey suggested that for 19 per cent of investors questioned, construction delays were a major worry. This is not surprising as over the last couple of years; most projects have suffered lengthy delays for one reason or the other thus, affecting end users and speculators alike. For the most part, these delays were brought about by overly optimistic completion dates, the unprecedented nature of the projects and also a series of unforeseen circumstances such as a shortage of available services, materials and labour.

In addition to the above, another concern was the quality of product. It is one thing to make something look luxurious and quite another to have the underlying components working to match the look. It is not always easy to project the durability of the materials used and it is sometimes the risk when buying off plan. However this will gradually be controlled as the supply of product increases and the purchaser is able to be more selective. If a developer is able to build and sell with impunity, then it is possible for quality to be compromised.

However, even though still relatively young, the Dubai market is maturing and becoming increasingly regulated with the level of legislation improving in recent months. While there is still a long way to go, the establishment of the Real Estate Regulatory Authority (Rera) along with the implementation of Escrow laws, has certainly helped to tighten things up in the market. This will ultimately put the country on an equal level when compared with our more developed international counterparts.

I would also add that if these questions were asked anywhere else in the world, security concerns would still be high on the list. After all, buying a property is a big step for many and therefore can create a sense of anxiety for the investor.

Escrow law

I believe that the Escrow law will help toward alleviating his problem. This requires monies collected in payment for units, to be held in a trust account and released in phases linked to construction. With escrow in place, clients can feel safer in the knowledge that their investment is safeguarded and certainly, we expect that this law will help expedite construction, as payments to developers will not be available for unrelated projects.

Dubai is gradually becoming a safer place to invest and while some delays are inevitable and often unavoidable, as competition increases, we are seeing more projects being completed on schedule and a growing trend of developers using their ability to meet deadlines as a major sales tool.

I guess the most useful element of surveys such as these, is that they serve as a reminder to all potential investors to beware and if necessary, proceed with caution.

We always advise people to purchase from reputable developers in an attempt to reduce any unnecessary risk. When selecting a developer, look at their existing portfolio both locally and internationally, research the company thoroughly and ask around for testimonials. More important, ask someone with first hand knowledge that is, someone who has purchased from them!

The writer is managing director of Better Homes.