News Column

Dubai gains traction reviving stalled projects

February 26, 2014

Manoj Nair Associate Editor



Dubai: Major reforms are in the offing to streamline the entry of bulk (angel) investors into stalled projects in Dubai and turn them around, according to market sources.

"There is an existing programme that's been operating under the Dubai Land Department; but the proposed changes could make it easier for investors to come in and in the way they can commit funds in reviving projects," said Samir Munshi, managing director of Orion Holdings. "We believe such discussions are at an advanced stage and would create a robust system that would benefit all stakeholders."

One of the proposals, Munshi hopes, would relate to staggered payment scheduled for those investors coming on board. "Rather than have funds to clear up all outstanding payments related to a stalled project upfront, staggering them would be ideal from an investor perspective," said Munshi.

At the peak of the downturn, there were an estimated 150 projects that had gone past the initial construction works before their developers wound them down. Since the market picked up, these numbers are being steadily whittled down.

Dubai Land Department's €˜Tanmia' programme has played a part in restoring 36 projects with 11,158 units; in the process 6,641 investors now have confirmed units in these. Tanmia's mandate stems from the Real Estate Investment Management & Promotion Centre, the investment arm of the Land Department.

Eighty government entities and developers have joined the programme to date, including Emaar Properties, Wasl Asset Management, Abu Dhabi Capital, Lootah Real Estate Development, Bhatia Contracting and Orion Holding among others.

"The [Tanmia] programme first lists the development companies willing to sell their incomplete projects, then targets companies and financially strong developers who look for acquisitions without compromising the rights of buyers," said Majida Ali Rashid, chairperson of Real Estate Investment Management & Promotion Centre.

Strict controls

"All procedures are conducted in accordance with strict controls applied by the Centre, especially in terms of asset valuation and the protection of buyers' rights."

From a broader market perspective, there is a lot at stake from reviving stalled projects. Many of these are in mid- to upper-mid property pricing spectrum, a category where there is a real shortage of new capacity given developers' emphasis on rolling out high-end projects targeted principally at high-end investors.

The revived projects and the units within them thus answer to a more affordable description. And if many of these projects are delivered at around the same time, it could go some way towards ensuring enough stock availability in the mid-tier range.

There are now enough bulk investors interested in snapping up deals in Dubai's realty, and their ranks continue to swell. This is where Tanmia can make a telling impact.

"The initiative offers multiple options for the closing of deals by buying the whole project or partnering with other developers to buy the project along with providing financial support to the current developer of concerned projects," said Majida, who is also assistant director-general at the Land Department.


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Source: Gulf News (United Arab Emirates)


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