THE current market situation calls for stringent regulation and scrutiny to ensure that only credible real estate developers enter the market, an expert suggested.
Peter R Riddoch, CEO of Damac Properties, said that companies need to be encouraged to discuss and disclose what they consider their risks to be as well as their approach to monitoring and managing those risks. This may be a major change from previous attitudes and procedures but in these days when rumour often presents itself as fact, it is better to opt for clarity and cohesion, he said.
The last four years have been exceptional for the Gulf region and local governments were able to lay the foundations for a strong legislative structure, leading to a healthy organic growth of the economy.
“While we deal with the global slowdown, which has dented the growth of the local economy, the key challenge for us is to focus on strengthening the weaker pillars – of which transparency is one. We need to raise our levels to those of other developed economies in the world so that we remain an attractive proposition for global investors,” Riddoch said.
While the markets in the region are improving their real estate transparency, Dubai is striding towards the maturity curve much faster, he said. Investment volumes in Dubai have increased dramatically since the freehold laws were introduced, which in turn has had a cascading effect on the overall business environment.
But it is important to remember that transparency is not just the responsibility of the government; it is also driven by local companies operating in the market, Riddoch said.
“In general terms, greater transparency equates to lower risks and increased certainty, which provides for informed decisions and increases the confidence in investment decisions. Most importantly, it gives us market information and a fair and efficient legal and regulatory code of conduct.”
This month, Dubai’s Real Estate Regulatory Agency (RERA) announced it would regulate the rental prices for a range of properties across the city to control spiralling rents and inflation. Similarly, RERA has made it mandatory for all mortgage contracts to be registered with the Dubai Lands Department to better regulate property and mortgage transactions.
Through these developments, Dubai provides a remarkable example of how improvements in transparency have stimulated the local economy and stresses the need for more bodies like RERA to help create a vigilant, stable and secure real estate market, he said.
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