Recovery of Off-plan Ventures Unlikely for Two Years.

The developers in Dubai need to think over quality and winning back investors smashed confidence in order to recover the off-plan real estate Dubai market which is unlikely to pick up before 2011 even after this move. The investors who have been deferred by the cancellations or delays also need to be won by the developers with tying pricing strategies.

Sana Kapadia who is the Vice President of Equity Research at EFG-Hermes said, “Investors have been holding back payments because construction is not starting and developers can’t move forward because investors are not paying, that is the reality of the current situation. The recovery of the off-plan market in the United Arab Emirates will happen only from early 2011.”

However some also think that it might take longer. According to Chet Riley, Vice President of Real Estate Equities Research at Nomura International believes it will be early 2012.

‘The over supply of residential units in the property market needs to be absorbed in the next two to three years. It is unlikely that the off-plan recovery will happen before 2012,’ he said.

The new investors need to be won by the developers with far more than mere promises as their confidence is being highly smashed.

According to experts, the tie-ups with mortgage companies and banks may help to ensure optimum funding in place and finally avoid the present ferocious state. They also emphasize on working more strongly with regulatory authorities to ensure the interests of the investors and to build their confidence once again.

“Aspects such as construction-linked payment plan will help to alleviate the financial burden of holding real estate if the project is delayed beyond the proposed completion date,” said Jones.

Kapadia also revealed that the blame for fuelling the assumption and spinning that led to the downfall of the off plan market goes to the developers themselves.

“Developers must avoid the trap of speculative payment plans that is 2 to 5% initial deposit versus the bulk at completion.” He said.

Gazumping- A New Way to Force Up Prices

The premium Dubai properties are pushing up sale price after the settlement of the final figure with the buyer. The practice popularly known as “Gazumping” has given way to the price rise of around 15% as reported by real estate agents.

The term was first heard of in UK in 1980s and early 1990 when property prices were jaunty. Gazuming often results in the loss of money, spent on pre-approved mortgages, for the original buyer .It involves a seller withdrawing of an agreed sale after accepting a second higher offer.

"In the last month, we have seen sellers of high-quality units failing to honor their commitments.Eight or nine of our high-value deals have gone sour. In most of the cases the owners randomly increased prices by eight to 15 per cent,” told Parvees Gafur, Executive Vice-President of Sales.

"There have been cases in the past few months where the seller has increased the price by 10 to 15 per cent. But none of our deals have gone bad since we had other listings in the particular area", added Vineet Kumar, Asteco's Head of Sales in Dubai.

Saeed Mirsaeedi, Investment Manager at Sherwoods Independent Property Consultants, said: "We have seen instances where the seller has increased the sale price after listing at a certain price. They have also been removing their listing in order to wait for the market to recover rather than sell at a lower price."

Gafur said, “ There was a shortage of high-quality finished units and as a result sellers were listing their properties with a more than one agent. In most of the cases property owners do not give a written commitment to sell a unit at a particular price.”

"A seller gives a verbal commitment of the price at which he is ready to sell. We then take about three to four days to find a buyer. During this period the seller goes to other agents who may say they can obtain a higher price, and so when we contact him with a buyer, he rejects the offer," said Gafur.

Dubai Real Estate Projects on Schedule – Memon Investing Dh 1.34 billion

Dubai has scheduled various real estate projects within the emirate. Memon Investments, one of the leading real estate developers in Dubai announced that they are well in place and on time with the construction work for all its running projects in Dubai. This is also a unit of Memon Group of companies and it announced that the construction of green buildings will continue and these new developments comprises of five new projects running at Jumeirah Village. The collective worth of the construction currently going in Dubai by this real estate developer is around Dh1.34 billion.

Ahmed Shaikhani, The Managing Director of Memon Investments said: “By taking these measures, we are increasing the potential of our projects to yield maximum investment returns, while also effectively reducing the ecological footprint, one of the common impacts of rapid advancement of developing economies such as Dubai.” This real estate developer is committed to deliver the projects despite of the cancellation of 48 property projects in the UAE. Its first development within the Champions Tower Series and the Cambridge Business Center is expected to get ready and delivered by the end of the year 2009.

As far as their new projects are concerned, Memon Investments has launched five real estate projects in Dubai Sports City. It included Frankfurt Sports Tower I and 4 towers within Champions Tower. These developments are in addition to Jumeirah Village Gardenia I and II and a construction in Dubai Silicon Oasis as well named Cambridge Business Center. Ahmed Shaikhani said: “The global recession has created an astounding backlash to the regional real estate sector that has even the largest real estate players in the region reeling from its blows. We are proud to be still standing strong amidst the downward momentum that is sweeping the regional real estate market. We are confident that the current economic conditions will have little effect on the construction of our projects."

Dubai introduces special property contract

Dubai has planned an introduction of a simplified contract that would become the plans to introduce a simplified contract that would become the custom for all property related purchases in the emirates as reported by the Gulf News. The Dubai Land Department has drawn up the approval of the standard contract, whose approval is awaited and it will clearly set out the terms for both sellers and buyers, said Emmad Eldin Farouq, department’s senior legal advisor. It is believed throughout the department that the standardized contract would make it more difficult for buyers to try to get out of the matter of signed deals or to add some fine prints to existing contracts.

The standard contract, which will be used for all the sales of property in Dubai, has been drawn up by the Dubai Land Department and is waiting for approval, according to Emmad Eldin Farouq, senior legal advisor at the body. The budge would diminish the number of developers and buyers back-tracking on deals which are signed, as the contractors signed deals, as the contracts would be clearer and apparent before signing, he added in a conversation with UAE daily Gulf News. "The contract is ready and we are waiting for directions," said Farouq.

Lawyer Michael Lunjevich, partner at Hadef and Partners, commented: "The standard contract is for finished properties between the buyer and the sellers. So it will have standard terms in line with market norms and then any changes will go to a separate segment to make it fair," Although signing one fundamental contract will undoubtedly make verve less complicated for developers and buyers, it will also cut the number of quarrels in the marketplace.

Despite the thinning up of contracts related to Dubai property, the land department and Dubai's RERA ( Real Estate Regulatory Authority) say that the burden rests with the buyer to ensure they go through the contract precisely before signing.