RERA, Dubai’s Real Estate Regulatory Authority has announced that it has started to suspend the trading licences real estate brokers in the Emirate, who have failed to register with their official Licensing Department. The move follows numerous warnings over the past few weeks to real estate brokers who have so far refused to conform to the new rules.

‘RERA has encouraged all brokers to formally register with the agency and those who have not registered should do so as soon as possible,’ said RERA Brokers Licensing Department Director Yousif Al Hashimi.

RERA has moved swiftly to back up their threats of suspending broker’ licences, and last week took action against Sulehri Real Estate, who were not registered with RERA, despite being registered with the Dubai Department of Economic Development.

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The last six months have been particularly challenging for the Dubai property market, with property prices in the emirates reducing by as much as 40% in some areas. More recently however, they have been signs that the market for property in Dubai is at least beginning to stabilise, and a report out this week from Standard Chartered is the latest in a series of announcements in Dubai which are suggesting that the worst of the crisis may indeed be over. Whilst it may be too early to start mentioning the green shoots of recovery just yet, factors such as the easing of the major bank’s lending criteria may well be beginning to have an effect.

Philippe Dauba-Pantanacce, Standard Chartered Senior Economist said “The end of the freefall is encouraging. The first signs of stabilisation in Dubai’s real estate sector have appeared, taking observers by surprise since further declines were expected. Some caution is warranted, as there are still question marks surrounding population flows.”

This process of stabilisation is undoubtedly at an early stage, however the major mortgage providers have relaxed their criteria in the past couple of months, and are now offering higher loan to value ratios than were being seen at the beginning of the year. This process has undoubtedly led to an increased amount of activity in the Dubai property market of late.

The traditional summer lull is expected to begin in the next few weeks, which will undoubtedly have an impact on any potential recovery in the short term, however these positive signs do bode well for the long term dynamics of the Dubai property market, and we should start to see more encouraging signs in Q3 of this year.

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There is no doubt that a new era in the UAE’s property market is emerging from the world economic crisis.

In the wise words of the Regional Managing Director of leading global real estate consultancy, Jones Laing LaSalle, in a buoyant real estate market people are less discerning about the quality of what they are buying, but then as the market shrinks there is a ‘flight to quality’. This statement was made a year ago and how insightful these words were with regards to the Dubai real estate market correction that followed.

Advisory Group have also seconded this statement, pointing out that the region’s real estate sector will re-adjust and become a market driven by demand, where need and customer preferences, as opposed to greed from frenzied speculators, will determine market prices.

On this basis, even though the overall price declines are set to continue across most real estate assets in 2009, developers that deliver on the quality they promised will be rewarded, while lower quality units will face the deepest price reductions. An average assumption by leading real estate advisory groups is that sale prices are likely to fall on average by 20% for apartments and 35% for offices. Villa prices, on the other hand, are likely to remain fairly stable.

Stagnating income levels in Dubai, driven by a hurting economy, mean that increased liquidity and widely accessible lending will be the key factors determining how and at what point the region’s property market will be back on the ‘road to recovery.’

Maintenance fees are a real cost to investors and one, which unfortunately, many buyers have over looked during the frenzied buying activities of recent years. The ‘double-hit’ to buyers of lower quality units is the fact that maintenance fees and other hidden costs will mount up as the common areas constantly require up-keep and replacements. The disappointment at having been quoted low anticipated maintenance fees by over zealous sales consultants will be rife amongst this investor segment, once the real costs become clear.

At the other end of the market, however, the higher quality units, usually sold by higher quality sales people which a more realistic approach, will be likely to stick within the forecasted maintenance fee estimates.

The Arabian Ranches provides a real life case of true quality prevailing. On final delivery of the early phases, prices rocketed. This was not merely due to the supply/demand equation but was more down to fact that buyers could see, touch and physically experience the quality of the villas. Once they then compared the quality to other ‘ready properties’ the buyers were more prepared to pay a higher price than for inferior quality. This was a very telling period when one considers that investors were paying equal prices off–plan for other villa projects at the same time as the Arabian Ranches project was an off-plan investment.

In summary, this real estate correction has highlighted that an investor serious about a sustained investment which can survive high and low points in the world economy cannot compromise on one particular investment criterion, quality.

Rally in DPM after shares surged 11.29 per cent on Thursday as the stock exchange’s mother company, Borse Dubai, proved it would not default on a loan due for refinancing this month.

Investors often uses Borse Dubai as an indicator for trading stocks, although the stock exchange’s profits are not linked to the parent, but also from general trading in stocks and shares. The Borse refinancing will give confidence to investors that Dubai will sustain through the financial crisis, but it has no direct effect on DFM. Along with Dubai’s main index rise of 3.1 per cent, Emaar Properties also advances 4.25 per cent.

Borse Dubai do now have the ability to refinance a full  $2.5 billion loan, something that boosts investors confidence.

A report out this morning from Jones Lang LaSalle has predicted that the Dubai real estate market will see a sustained period of growth in both rentals and property prices from 2011 onwards, but that 2009 will rather be a correction period.

The report also stated that a number of Middle East North Africa (MENA) markets may in fact start to return to growth in 2010, however this was unlikely to include Dubai due to the significant levels of new supply in the property market. According to the report, Dubai has suffered more than other markets due to the greater level of exposure to overseas investment throughout the emirate.

“The region’s capital markets are at risk. Banks have stopped lending and are now seeking ways to reduce their over exposure to real estate.

“Developers are experiencing severe cash flow risk from defaulting buyers and a dried-up debt market; investors are waiting for ‘blood’ before they begin acquiring and many have lost wealth in the stock markets. Meanwhile, sellers’ expectations are still too high as they have not yet fully adjusted to the new market realities,” the report said.

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