The Role of Government in the Development Of Dubai

The pre-dominance of the Dubai property sector has attracted the attention of many buyers and investors in UAE. The rise of Dubai property segment has proved that the stable government is the backbone for survival. Since the oil boom, the policies, property laws, polity and governance of UAE have been citizen-friendly. Now with focus on Dubai property, the bulwark of government machinery to safeguard and control real estate development is already active in many areas. The Dubai Land Department and RERA are the main government bodies that monitor all Dubai property development.

Some of the main areas that the government is monitoring Dubai property concerns with the revision of laws after the freehold land has become open to overseas developers, investors and buyers. It was only in August 2007 that the government declared a law on mandatory escrow accounts for all Dubai property developers and builders. This is very critical as not all Dubai property builders are reliable. To protect the buyers, it was natural that the government passed this crucial Dubai property law. With this one law, the Dubai property developers have been put on leash. In compliance of this Dubai property law, it is now compulsory for all monies paid by off-plan buyers to be held in separate escrow accounts. The funds can be released only when Dubai Land Department permits it. The government itself is the biggest Dubai property developer. It will have to lead by example and help other Dubai property builders to follow. At the moment, the biggest attraction is the rental yields for buyers of Dubai property. Some buyers have also invested in Dubai property under construction. This means the financial flow has to be smooth. If any project is affected by non-flow of funds it could create tremors of uncertainty. This would only fuel rumors of crash of some Dubai property, which would ruin the government’s painstaking efforts since 2000.

The government has to constantly regulate the Dubai property development least it turns into a nightmare for all related sectors and people. The onus lies on the Dubai land Department and RERA to ensure Dubai property will not slide and affect the region’s economic growth. In fact, the entire Middle East region is dependent on continous Dubai property development. The Real Estate Regulatory Authority (RERA) CEO, Marwan bin Ghelaita has a special role in making real estate development in UAE more stringent. The escrow account which has come into existence will slowly be extended to all projects related to Dubai property by the beginning of 2008. Buyers, who have become jittery about some delayed projects of Dubai property are now confident that their investments are safe. The repercussions of the new LAW No. 8 are apparent. Few Dubai property builders have announced any new projects. Meeting the three important criteria of RERA has stopped the unchecked growth of Dubai property. For all practical purposes, new investors have to toe the government’s regulatory line before opting for investments in Dubai property projects in future.

Final Tip: Brace up for more regulations as the Dubai Land Department formulates rules for delayed projects post 2007.