Expert calls for coordinated package of measures to kick-start UAE property market

Expert calls for coordinated package of measures to kick-start UAE property market

Government agencies, property developers, banks, insurance companies and brokers need to agree on a combined solution to support sustainable sales drive

A UAE-based real estate expert has called on industry professionals including government agencies such as RERA to help create a coordinated package of measures to kick-start the UAE property market.

According to Mohammed Nimer, CEO of mid market property development company MAG Group Properties which is involved in AED3 billion worth of projects in the UAE, developers, government agencies, investors, banks, insurance companies and even brokers, are all working to their own agendas to try to get property sales moving again.

“Each interest group is having a modicum of success, but it would be far more effective if all interested sectors worked together. From investment and development right through to the hand over, we could manage the entire spectrum of the property cycle and speak with one voice.”

Nimer, welcomed recent moves such as HSBC bank raising its loan-to-value (LTV) ratio to 75% and the decision by other banks and developers to tailor repayment packages for buyers experiencing financial difficulties. However these isolated acts, although extremely positive, are what Nimer is highlighting.

“In isolation these unilateral measures by individual organisations will have limited effect. For example, if a buyer can’t manage a 25% deposit the sale falls through. Easy payment terms are good news for existing investors, but they don’t address new sales,” explained Nimer.

He also pointed out that more developers and investment groups are taking the rent-to-buy route to keeping the house sale option open to those that might otherwise lack the confidence to commit to home ownership at the moment.

And he praised Dubai Government’s moves to guarantee job security for all government employees and to extend the work visa expiry period so that redundant expats have more time to try and find work.

“These initiatives all contribute positively in some way to encouraging property sales, but if all these effort could be coordinated and put into one package, the effect could be much more effective,” he said.

The insurance sector, too, could play their part by initiating redundancy/mortgage protection policies and by doing so help allay fears of being unable to sustain mortgage repayments should investors lose their job.

Nimer also admitted that although it may be considered too high a risk by the industry to offer such cover especially in challenging economic times, there were still many sectors where the prospects of ongoing employment were sound.

“Government workers, doctors, teachers, as well as several other areas in the public and private sectors including facilities management, legal firms, oil & gas, power generation, infrastructure projects, IT and the retail food sector, while by no means recession proof, should weather the economic downturn in tact.

“Just recently, for example, Dubai Internet City reported a 25% increase last quarter in the number of companies joining its FirstSteps@DIC Business Centre, an initiative for SMEs to ‘test’ the market before contracting permanent office space.”

There is still growth out there and I think business leaders and the UAE government can play a key role by urging banks to grant mortgages to people working in these relatively secure job sectors.”

“In summary government regulation, rent-to-buy, redundancy insurance, higher LTV ratios, relaxed lending criteria, extensions to cancelled work visas and above all total transparency will breathe confidence back into the UAE real estate sector,” concluded Nimer.