The Wild West of Real Estate

JBR towers nearing completion and the Grosvenor Hotel in Dubai Marina.

The good and the bad of the real estate or property market in the UAE is that almost anyone can buy or sell. From a property buyer's perspective it could hardly be easier. You see an ad or brochure of an off-plan property and after some scrutiny decide you'd like to make a purchase. You contact the agent or developer, submit a deposit (usually 10%) along with a passport photocopy and voila, the property is secured. All else that needs to follow is completion of payments over installments, up to the completion of construction. Once final payment is made the property is yours. Simple really. It doesn't matter who you are, from which country or where you currently live. There are no forms to fill out--save a booking contract and later a sales agreement--no lawyers to consult, and no approvals to await.

What could be easier from the buyer's perspective? The bad is that there is no one to advise or warn as to whether the property is a sound investment or not. It is up to the buyer to seek his own counsel. There are no guarantees of protection should the developer or agent default before the property has been handed over. There is usually no escrow account in which to secure one's deposit and installments. Thus, you have the wild west. It is very much in the hands of the buyer to either do his homework or chance it.


New tower rising along Sheikh Zayed Road.

For the developer likewise, embarking on a project could hardly be easier. He need only finance purchase of the land to build on and have his building plans approved, without the onus of strict scrutiny of his credentials. His primary measure of success will not be to have built the structure but only to have sold it. Since sales take place mostly off-plan he need only submit a project that is at least good on paper.

What could be easier from the developer's perspective? The bad is that like the careless buyer, the inexperienced developer may attempt to bite off more than he can chew, by embarking on a scheme beyond his capabilities. Although likely to have received substantial payments upfront, the unqualified developer may find himself unable to secure and adequately deal with contractors. He could eventually loose money by not being able to recoup costs spent on the land purchase and on materials and labor as the project gets underway. He may find himself mired in legal disputes with both buyers and contractors.

It is a bit of a wild west scenario for both the buyer and the developer, although the eventual fate of the project is much more in the hands of the developer than the buyer.


Towers rising in Dubai Marina and Jumeirah Lake Towers district.

"Real estate investment projects need a regulatory framework," says Manoj Nair, editor of Property Weekly. Such a call deserves a big "Amen." Eventually, one would expect, the market will mature and such will be the case. But with the emergence of more regulation and controls will also come the increased burden of proving one's credentials. This could remove a lot of the existing simplicity for both the buyer and the seller.

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