Interview: Sultan Butti bin Mejren
What precautions can be taken to ensure that recent short-term growth in the real estate sector is not at the expense of medium-term stability?
SULTAN BUTTI BIN MEJREN: The Dubai market is more mature and stable now than before the global financial crisis in 2008. The Land Department considers long-term planning crucial to its vision of making Dubai the first choice for real estate investors. Foreign direct investment, fuelled by regional and domestic demand for stable real-estate markets, will catalyse growth in the long term. Having the most efficient and flexible real-estate regulations in the region also draws new investment.
What challenges does the pending Real Estate Investor Protection Law pose in being even-handed towards both investors and developers?
MEJREN: That law is meant to protect all parties involved in real estate development. This will serve the whole economy and is in the interest of Dubai and the UAE, as well as investors. Protecting investors gives them confidence to invest, thus helping sustain the growth we are witnessing. Real estate developers, of course, will also benefit from this security.
Which areas of the real estate and construction market require sustained attention by regulators to curb the risk of another boom-and-bust cycle?
MEJREN: After a careful look at this matter we concluded that, to ensure a sustainable, professional and ethical real estate market, it is critical to protect every player in it. Development, brokerage, valuation, property management, rentals, surveying – all are important fields that we are watching carefully to prevent unsustainable practices from proliferating.
Following the successful institution of rental- and service-fee indices, what other types of database are being considered to maximise transparency?
MEJREN: According to the JLL Global Transparency Index, Dubai has the most transparent real estate market in the Middle East and North Africa region. This is due to our advanced regulations and the scale of information shared with the real estate market. Ejari, an online tenancy registration system run by Dubai’s Real Estate Regulatory Agency, will help refine our rental index, and give us an excellent tool to monitor the real-estate rental market. The Department has also launched eMart, an online properties portal that includes, among other features, a multiple listing service. This will enable investors, tenants and brokers to visualise and compare market trends, and local supply and demand.
Greater regulation of small and mid-sized developers has triggered significant consolidation in recent years. How do you see prospects for new entrants?
MEJREN: I think our market has enough developers, brokers and property managers to function well. However, we need more companies that inspect and appraise properties. There are low barriers to entry. We also wish to see more consolidation of development and brokerage companies so that they are more resilient to fluctuations in the local market.
Some say the chief lesson of the crisis is that self-regulation and corporate responsibility are the best road to long-term stability. What would you say?
MEJREN: To protect the rights of all parties in the real estate market, government regulation is necessary. Now as we move toward a more mature market, certain self-regulatory elements will be introduced. Government, however, should always have some presence to ensure that decisions are balanced and do not benefit solely the interests of one party. It is important to remember that one of the reasons behind global financial crisis was loose regulation, or “self-regulation”, in several key developed economies. We believe in talking to different stakeholders through our networks of industry groups and advisory boards to understand their needs and expectations, and are confident that thus we will maintain a stable regulatory environment.
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