Dubai Real estate sector has not been the most lucrative sector for a while. It was the worst hit property market in the Gulf.
The sector has been hit hard in recent years with billions of dollars worth of projects put on hold or cancelled. The property priced have slumped as much as 60%.
Dubai?s Real Estate Regulatory Authority (RERA) said earlier this year it canceled as many as 217 registered property projects over the past two years.
The total value of property sale transactions plunged to AED119.5bn at the end of last year from AED152.9bn a year earlier, it said.
Analysts are not sure if the house prices would stabilize or keep plummeting.
In the midst of all this chaos the government of Dubai has decided to straighten things out.
The government of Dubai has decided to establish a commercial entity, to better manage its real estate operations, Dubai Real Estate Corporation (DREC).
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE in his capacity as the Ruler of the Emirate of Dubai has issued Law No. (11) of 2011 amending Law No. (14) of 2007 establishing Dubai Real Estate Corporation..
As per Article (3) of the law, a public corporation owned by the government will be established operating its work on a commercial basis under the name ? Dubai Real Estate Corporation? and enjoys a legal personality, financial and administrative autonomy and legal capacity to undertake all actions that ensure the achievement of its purposes. It may also contract with third parties and sue and be sued in that capacity and to delegate any other person for this purpose.
The Corporation aims to own and manage the real properties registered in the name of the government or any of its departments, including the ownership, reconstruction, investment and the use and exploitation of land and commercial and industrial real estate, located in the emirate. It will also provide building services and implementation, marketing and management of buildings and real estate and commercial properties in addition to the development, purchase, sale, lease and management of real estate properties registered in the name of the corporation.
Additionally it will be able to contract with parties. However on the downside, it will also be open to sue and be sued.
However, there has been no official announcement of specific properties to be included under the management list.
Just in time
This declaration comes at a time as developer Nakheel is restructuring a $10.9 billion debt, prepares to break away from its parent company Dubai World and become wholly owned by the government as part of the Dubai World debt restructuring plan.
Commenting on the move, Jesse Downs, Head of Management Consulting at Jones Lang LaSalle, said consolidation of government real estate activities was ?always an inevitable, and frankly beneficial, consequence of the economic and real estate downturn emerging over the past three years. Consolidation allows for oversight and coordination of operations, which can facilitate sound urban planning, financially viable development and generally better economies of scale?.
?In terms of pricing and demand for real estate assets, there will not be an immediate impact,? Downs said.
The people which ArabianGazette.com met on the streets had mixed messages.
Nazir a PR analyst from Egypt said ?It is time the government stepped in to clean up the property mess. It has become a global joke, that Dubai builds properties for invisible tenants.?
He was referring to the rumors that completed properties on many projects have not been inhabited.
Raju an engineer from India said ?I was happy when I heard the news about the Dubai Real Estate Corporation. This will help the market recover faster.?
However there were others on the streets of Dubai with a differing view.
A finance analyst Raphael from Brazil told ArabianGazette.com that he has become very suspicious regarding Dubai?s move. ?Why are they trying to play Big Brother?? when asked if this move will help Dubai recover faster? he said ? I think it would just make it more slow, that?s what red tape does, this is whats happening in my country, Brazil?
?The beautiful thing about Dubai is that it?s a place for all to work and live harmoniously. Thereby I am sure Sheilkh Mohammad has the interest of all, locals and expats when he considers any official move,? Shelly from Arizona, USA told ArabianGazette.com over the phone. ??So Kudos to him, he is the cr?me of the cr?me.?
As always the eyes of the world is on Dubai. GO Dubai!