Tuesday, December 15, 2009

Investors welcome ARRA's new match-making initiative

The new policy by Ajman Real Estate Regulatory Authority (ARRA) to match investors who have lost money from suspended projects with approved developers, have so far received positive feedback from investors.

The Ajman property sector, although the smallest among the seven emirates in the UAE, was the latest victim of the global financial crunch.

Several thousands of investors' who invested in the property sector of Ajman, offered a cost-effective alternative to Dubai's then expensive properties, by attracting middle income families into its booming real estate market. Therefore, Ajman noticed sprouting of several master-planned communities including Uptown Ajman, Awali City, Emirates Lakes Towers and Emirates City.

Few of the developers who had fled the market were facing financial constraints, following the Lehman Brothers collapse, which caused concern to the investors. It was then that ARRA stepped in to defuse the situation and struck a deal with few developers who are pursuing projects to help developers and investors.

The initiative, which was executed a month ago, facilitates investors to choose properties from a list of approved and listed developers and negotiate a discounted rate that would suit them, in order to cut their losses on suspended projects.

The Director General of ARRA, Omar Al Barguthi, described the initiative as match-making initiative and said that investors who have lost money from developers who are unable to complete the projects are offered the option of transfer to a certified credited project.

The initiative aims investors who have paid installments to a developer who is not seeing the project through. ARRA takes the role of a mediator, trying to strike a deal between listed developers and investor on discount rates for investing in a new project.

The developers approved by ARRA will have to fulfill 16 requirements which will be reviewed every month. If they stop meeting these requirements after some time, their registration will be cancelled.

According to analysts, this is a good example of how government authorities could help the industry in moving ahead.

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