On Sunday the Dubai Government formed a high-level committee to tackle the impact of the financial crisis on the emirate’s property market. The committee is exploring options to restore confidence in the market in the near future.
The formation of the committee is the latest measure aimed at protecting the United Arab Emirates from the global credit crunch.
The finance ministry is also in the second phase of pumping Dh70bn into the financial system to facilitate banks’ balance sheets and allow them to continue lending to local projects and companies.
As another measure, Dubai is also considering limiting the future supply of property to stem a slide in prices. The Government will closely supervise the development growth to ensure that demand remains above the demand.
Analysts have long predicted that the government would ensure a soft landing in the event of a real estate correction, which has come more quickly than expected because of the global financial crisis.
Other confidence-boosting measures under consideration include easing financial repayment terms for property buyers and encouraging consolidation in the real estate sector.
Emaar Properties introduced last week more flexibility on mortgage payments to ease terms for some buyers.
The government has blessed a merger between two mortgage providers. Bankers have said they are also looking at consolidation among developers.
Mr Alabbar, who is a senior government official, said he was confident these measures and the resilience of Dubai’s economy would help revive the faltering sector, which had seen some developers cut staff.
“The real estate success story of Dubai is now over a decade old and continuing demand will sustain its growth over the long term,” he said, pointing to the region’s role as a centre for trade, tourism and services.
The rapid rise in Dubai property prices over the past seven years has been replaced by investor’s frustration that is translating into panic selling in some quarters, real estate agents say.
It is nice to know that the Government is “limiting the future supply of property to stem a slide in prices” and “easing financial repayment terms for property buyers”.
In addition to the above the government should instruct banks to issue mortgages to all those who have paid 50% to 60% of the value of the property to the developer. Regardless of a being a resident or a non-resident. So that the property owner can take delivery of the property and rent it out or sell to re-invest in other properties.
The problem one sees in the Dubai Realestate market today is because of “hard to get mortgages” even for those who have paid 60% value of the property to the developer. Without mortgages, Dubai will become a “Landlord tenant city”.
The BIG PROBLEM today in the Dubai realestate market is that those who have paid a major part of their instalments, for example, 50% are not able to get a mortgage, hence they are “panic selling” thus creating a glut of “properties for sale”. Secondly, those banks who had promised to give mortgages are going back on their committment.
I have mentioned in my previous comments that the Government of Dubai should offer free land to reputed Schools/Universities/Hospitals/Medical Research Centres to setup their institutions in Dubai. There has to be a balance between residential/commercial/ and essentials.
Hi,
many thanks for your comments.
Banks are still giving mortgages, but have tightened the rules.
The panic sellers are not that many really, as there are no buyers at all.
Most people merely observing the situation for the moment and holding on to their assets.
As for the schools and the universities: the Government ones are free of charge and build on state granted land, while the private are business ventures. In both cases, we have plenty.
At last, for 37 years UAE achieved more than many countries have done for much longer period of time.