Issue No 305 - 13 April 2009
UAE 'in need of coordinated realty package'

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.

Mohammed Nimer, CEO of mid market property development company MAG Group Properties, said 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,' said the official of MAG Properties, which has Dh3 billion ($816 million) worth of projects in the UAE.

'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,' he pointed out.

Nimer welcomed recent moves such as HSBC bank raising its loan-to-value (LTV) ratio to 75 per cent and the decision by other banks and developers to tailor repayment packages for buyers experiencing financial difficulties.

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

He also pointed out that more developers and investment groups were 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.

Nimer also lauded Dubai Government’s moves to guarantee job security for all government employees and 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 added.

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, he said.

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

'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,' he commented.

“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,” Nimer added.

Source: Trade Arabia News

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