The emirate’s real estate sector can only pick up if Dubai’s population grows, says a new study. Transparency and better customer service are also essentials.
Dubai’s real estate market is facing a massive oversupply, and will need a quick growth in the emirate’s population in order to recover, according to the latest report released by property broker Harbor Real Estate.
“In 2010, oversupply will be an issue in the market. An estimated 60,000 residential units and 30 million square foot of office space are coming on stream by the end of 2011,” the report said, adding that Dubai Marina and Jumeirah Lakes Towers alone were expected to see around 10,200 new units in the next two years.
Dubai’s population declined between 5 percent and 8 percent in 2009; the city will need to see a growth in its population to increase property demand and “kick start the industry again,” the report said.
It’s also not going to be easy to attract existing investors. Demand last year was dampened by the lack of available credit and the tightening of lending rules by mortgage lenders. In 2010, investors are expected to be extremely cautious, the report said.
“Gone are the days of the easy sale to the investor. Simply put, many people have been hurt by the real estate price correction. In effect, they have developed a risk aversion, which will take some time to overcome,” it said.
One of the key things essential to increase the confidence of consumers in the market is to increase transparency, the report said. Currently, laws and regulations about disclosure are limited.
“Investors, especially those from overseas, need to feel that their rights will be protected and, in case a dispute arises, resolution will be equitable, accessible and timely,” the report said.
The timely release of economic data will also help people assess the feasibility of their intended investments.
“Buyers, particularly those with cash are the new kings. This year, real estate professionals will need to serve the customer and serve them well. The main drivers of buyer dissatisfaction have been in the areas of knowledge, consultative ability and empathy. This responsibility does not only lie with brokers but also with developers who must ensure that end-consumer needs are understood,” the report said.
Dubai’s authorities have already started taking measures to regulate the emirate’s property market. Most recently, Dubai’s Real Estate Regulatory Agency (Rera) said on Sunday that it has signed a new deal with the Ministry of Labor to officially recognize real estate brokers as a separate professional category. Labor cards and residency visas issued to brokers will now include their designation, instead of categorizing them as sales staff. The authority said that the move would help to remove bogus brokers from the market.
“This is the first step towards a complete classification of the real estate professions in Dubai,” Marwan bin Ghalita, CEO of RERA, said in a statement, adding that the move will promote “transparency and professionalism” in the property sector.
In 2009, Rera announced that property developers in Dubai will have to pay the complete land price before selling off-plan developments and will also need to inject at least 20 percent of the project’s value before beginning construction.
Late last year, the Dubai Land Department also said that it was planning to introduce a new law to protect the rights of property investors during the first quarter of 2010.