Dubai's property woes are not intractable, despite the prevailing opinion. Some creative thinking and a sense of reality will go a long way to unlocking billions of dollars stuck in the market. The new contracts being signed by investors in the Park Towers project in Dubailand will see them become co-owners of the land with the developer, Gulf Investments, and are a small step towards breaking the deadlock.
With property prices down by more than 50 per cent in some areas of Dubai and transactions slowed dramatically, most of the people involved are going to lose money, especially if they invested at the peak of the market. It's a question of how much, and how to make the best of it. When an investment goes sour, there is a loss to take. But joint ventures with developers, while an admirable achievement, are not a panacea for the market.
With project finance and mortgages scarce, many people invested in the sector are stuck between a rock and a hard place. The courts are filled with disputes and some investors are left with land that is fully paid for in master developments such as the Waterfront with an uncertain future at best. The obstacles for a recovery also include Dubai World's restructuring of US$26 billion (Dh95.49bn) of debt, a lack of clarity over new laws planned to regulate property and visa requirements that prevent potential buyers from coming to the Emirates. Some developers have fled the country or have ended up in jail, complicating the matter even further.
The authorities, including the Real Estate Regulatory Agency and the Dubai Land Department, are working on ways to address these issues, but they need to communicate more with stakeholders across the emirate. Most important, both sides need to come to the bargaining table to find terms that developers and buyers can live with. @Email:bhope@thenational.ae