Monday, December 04, 2006

Finance trouble because of cowboy developers

Cowboy developers are putting finance in jeopardy. Cowboy developers are those who secure loans and buyers' down-payments on property projects and then leave the country.

Banks and other financial institutions in the country are thinking twice before lending to new developers and also to companies which complete their projects late or never complete.

With the Dubai Land Department introducing regulation on trust accounts things are worsening. Investors' payments are safeguarded by independent bodies. Currently, most payments are made directly to the developers.

Lenders are now favouring a certain property developer with established. If
developers cannot secure loans to meet construction costs and do not have
sufficient personal finance, they will opt for the option of using the buyers'
down payments.

The Land Department has time and again outlined the plans to bring in regulations on trust accounts in Dubai, which would limit a developer's access to buyers' down payments before construction is complete.

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