The Real Estate Regulatory Agency in Dubai is working on a new law that will give property investors new rights.
Although it refused to reveal the details at this stage, a spokesman confirmed that it will be ‘comprehensive’ and seek to protect investors.
‘Along with the Dubai Land Department we are studying a new law to protect the rights of real estate investors.
Our ultimate goal is ensure justice and set up proper rules and regulations to regulate the relationship between developers and investors,’ the spokesman said.
He added that a draft of the law will be ready to send to the Executive Office to get the government’s approval by the first quarter of 2010.
It is expected that the new law will be seen as a chance for the Emirate to try to win back confidence among investors following the revelation that state owned Dubai World, owners of development company Nakheel, has massive debts of $59 billion and it is currently trying to restructure some $26 million of debt.
More transparency is likely to be welcomed across the real estate industry.
According to Jason Manolopoulos, managing partner of boutique investment firm Dromeus Capital, the current crisis has raised concerns over corporate governance and transparency to a much higher level.
‘Investors should have been wary about the fundamentals of Nakheel. Everyone was fully aware of the overcapacity on Dubai real estate.
I think 2009 will be remembered as the year when the idea that an implicit guarantee should be priced only slightly wider than an explicit guarantee was relegated to history,’ he explained.
‘Investors will have to differentiate, and the selling of companies on the basis of their connections and strategic importance will no longer work,’ he added.
Dubai’s debt bombshell will further hit confidence in the emirate’s expatriate community and could lead to a wave of redundancies at government-owned companies forced to restructure.
‘It’s clear there will be job cuts but it’s too early to know the extent of it,’ Raj Madha, an analyst at regional investment bank EFG-Hermes said.
