Monday, March 02, 2009

RERA launches new initiative to safeguard investors

Henceforth, property investors can get complete details about the work progress of their new homes, or details about whether the work has been cancelled or delayed, based on an initiative designed to protect investors.

The Independent Progress Monitoring Report (IPMR) is an online scheme announced by RERA, which will see Government Engineers touring the housing construction sites in Dubai to check the progress being made.

A report will be published with photographic evidence and details about the progress of building work, with details of various stages reached. The monthly updates of the work will be available from next week on the website www.rpdubai.com.

The property sector lacks confidence currently, with the investors being worried that the projects are either cancelled or postponed, which has prompted RERA to take this initiative, agreed the Chief Executive of RERA, Marwan bin Ghalita.

The IPMR will keep a watch over only the projects with Escrow Accounts, which constitutes a total of 695 out of 875 projects registered with RERA. RERA, together with few other agencies will control the supply of new units entering the market by restricting building permits and developers.

During its launch in 2006, RERA had 875 developers on its books. The numbers of developers have reduced to 427. Property developers have reported that anywhere from 1 percent to 80 percent of buyers are defaulting on their payments, based on the building and construction progress and confidence in the developer.

According to Bin Ghalita, the housing projects in Dubai can be broadly categorized as those that are likely to be cancelled, those to be rescheduled, those to be merged, and those that would be completed in two years time. The new developers will have to adhere to the tougher guidelines and prevent the market from getting overheated in future.

The new guidelines by RERA depicts that no project will be able to commence sales unless the land occupied by the project is fully owned by the developer, with at least 20 percent of finances required to build it has been secured.

After attaining those standards, developers will be able to collect not more than 30 percent of the purchase price before beginning the construction, following which the payment plans will have to be connected with construction milestones.

According to Blair Hagkull, the Managing Director of the Regional Office of Jones Lang LaSalle, RERA's announcement represents a major change for Dubai property sector.

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