The Effects of Real Estate Laws, Policies, and Regulations in Dubai

Since the introduction of the Real Estate Regulatory Agency (RERA), set up to monitor, control and register all transactions in the emirate, the real estate market has began to stabilise.

The Strata Law, introduced in 2010, provides more accountability and transparency from developers with the Dubai Land Department publishing daily transactions on their website to allow extraction of price data for comparisons to previous years and other locations. RERA also introduced Ejari, a digital system where all lease contracts for Dubai properties are recorded. This looks to defend tenants and landlords with legal rights and provides a more accurate rental index.

These additions and improvements have bolstered the market to strong recovery starting 2013. The added enthusiasm of the Expo 2020 doesn’t hurt the cause either. Also, controls were put in place to protect from over-saturation of the market. The mortgage cap law introduced a maximum loan-to-value (LTV) ratio of 75 per cent and Dubai Land Development registration fees were doubled to 4 per cent.

This has made the real estate market in Dubai more stable, and therefore more predictable in the short and medium term. Transparency of performance offers investors insight on the market health to help in trying to gauge future trends. Most experts feel that this stability offers both buyers and sellers the benefit of a calmer property market where decisions can be made in a much less rushed fashion than before.

As the market progresses, developers earn their reputation based on their track record, which are stringent on delivery and stock market performance over time. It gives today’s buyers the benefit of seeing a developer’s previous work.

Purchasers now buy with increased confidence, and are willing to pay a premium for names that they trust. Consumers have increased choice by way of location, design, specification and payment plans. Developers are also more experienced to deal with any unexpected changes in the market.

Some relatively new neighbourhoods are already developing their own identity and enjoying the delivery of increased services and infrastructure. This provides potential purchasers with the valuable advantage of having everything in place and knowing what an area is like before they buy.

All stakeholders can now enjoy the benefits of being more aware and responsible in their decision-making. Laws have been passed to ensure safer transactions, increased clarity and improved protection to all involved.

While this next phase may not offer the types of spectacular financial gains enjoyed by some of the early pioneers, it certainly offers the advantage of maturity.