HE Sultan Butti bin Mejren, Director General of Dubai Land Department, is stimulating the future of real estate by securing a legislative system that protects the rights of investors.
You took charge of DLD at a time when Dubai’s property market was booming, but the market took a deep decline two years later. Fast forward a decade, what have you and DLD learnt from the property bust in 2008/2009?
The real estate movement in 2006 and 2007 was strong due to Dubai’s economic strength, attracting a lot of capital and investors due to the availability of qualitative investment opportunities. The market continued to grow until 2008 when the global crisis hit. Dubai regained its economic strength within three years of the crisis and moved forward with its mega real estate projects, gaining back the interest of several investors. Things have been progressively improving since and Dubai has advanced upon its ambitious investment plan.
Dubai’s plan for 2021 is one of the most important catalysts to position Dubai as a global destination. The emirate is witnessing a major development due to ambitious initiatives, programmes, and projects—most notably through the hosting of Expo 2020—and is looking to consolidate its position as the capital of the Islamic economy, launching several strategies, such as the Smart Dubai strategy, which aims to make the emirate the smartest city in the world.
Can you share with us the current value of Dubai’s real estate market and how it compares to previous years?
In 2017, Dubai Land Department (DLD) recorded 69,000 transactions worth $77.6 billion. During H1 2018, DLD recorded transactions worth $30.2 billion, not factoring in contracting, development, and real estate and construction projects.
Property markets go through swing cycles. As the agency regulating real estate in Dubai, how do you ensure that every time there is a dip in the market you are able to cushion it or give it a soft landing?
Real estate investors are the market’s primary influencers due to the role they play in the real estate supply and demand equation. This is evident in a report issued by DLD stating that 47 new projects have entered into the market in the first eight months of the year, providing 14,000 properties: 10,000 apartments, 364 residential complexes, 2,258 townhouses, and 1,575 villas.
In the same time period, 1,000 investors received their properties and concluded 900 transactions worth more than $3.2 billion, reflecting Dubai’s superiority over other international investment destinations. We are also in strategic partnerships with major
developers to discuss the real estate market developments and shape the future needs of the real estate market by focusing on specific and timely projects.
Do you think Dubai’s property market is regulated enough? Are speculation and flipping well under control?
Yes, the Dubai real estate market is regulated by the laws and legislations that were issued over the past ten years, and through DLD’s electronic systems that guarantee the rights of investors. Additionally, the speed of concluding transactions is only 30 minutes because all relevant data is fully entered into the system, which DLD was able to operate using blockchain in 2017, increasing the system’s capabilities and efficiency.
The Real Estate Regulatory Agency (RERA), as part of its responsibility to license real estate advertising and projects, monitors the market by tracking ads posted by developers, brokers and any announcement related to the real estate market. All projects are licensed in accordance with the regulatory requirements, including the payment of the full value of the land allocated to the project by the developer, its issued title deed, and the existence of final plans issued by the competent authority. The developer is also required to open an escrow account for the project through which the investors’ rights are guaranteed.
The Dubai Real Estate Institute (DREI) educates and certifies real estate brokers, each of which require a license to operate. There are also many organisational achievements that have made the real estate market completely safe.
As for price manipulations, we have worked on issuing laws and regulations that limit them, hence there are currently very few, if any. The real estate investment promotion sector has also completed a manipulation index that monitors the percentage of manipulation in the real estate market.
As demand for more affordable housing options increases, how do you plan to incentivise developers to address the gap?
DLD constantly informs developers of the market’s needs through meetings and discussions, and encourages them to develop projects that meet the needs of the larger population. Due to a market-based coordination, developers are becoming more aware of the promising opportunities in the affordable housing sector with some of them having delivered a number of projects in this sector, while others are continuing their operations to build such projects in new areas in Dubai.
Over the next few years, we will witness a wider range of real estate units that will focus on specific categories and deal with demand realistically.
Do you think investor confidence in Dubai is still strong? What are some of the measures that you are looking into to
further enhance this confidence among investors?
Dubai is an attractive investment destination due to its exceptional projects that have caught the attention of more than 200 nationalities from all over the world, especially when viewing the return on investment in rented properties that range from 6% to 8%, which is a very encouraging return and hard to beat anywhere in the world. In addition, the strong legal and regulatory environment of the Dubai real estate market helps maintain investor trust, as they find Dubai’s operating system a source of reassurance.
In addition, DLD seeks to attract more investments by taking advantage of the safe and attractive environment through its real estate investment promotion sector. This has led to an increase in partnerships that support our projects and initiatives in the real estate sector. In order to strengthen these partnerships, we have opened a number of real estate promotion trustee offices in India, China, Russia and the U.S. to connect with these investors, encourage them to invest in Dubai, and inform them of all the opportunities in the U.A.E.
Dubai’s real estate market confirms its continued sustainability, attracting 9,500 new investors between 1 January and 31 August, 2018, with a total value of $5.1 billion in investments.
Are you planning to introduce any further measures to protect investors buying off-plan properties in Dubai?
We set laws that protect investors’ rights when it comes to off-plan properties, including the requirement of developers to open escrow accounts in which investors’ payments are deposited, and the need for a developer to register a sale in the preliminary registration system, with fines and penalties being incurred on developers who do not follow these laws. We are always studying the gaps that occur through our work and striving to correct them.
What has been the feedback you have received for all the steps you have taken to protect investors and enhance the investment climate in Dubai’s property sector?
We have witnessed positive reactions from major investors, especially with regard to government incentives. Such measures will undoubtedly contribute to the ideal financing and investment environment for the real estate market, and will be critical to its stability. In addition, developers and investors communicate with us to learn about the new procedures, launching innovative projects in the market to ensure additional successes for their investments.
Do you take any examples of governance from the world when regulating the market?
Dubai’s experience is now global through the establishment of cooperative relations with international institutions in brotherly and friendly countries who share their experiences and best practices, especially those related to regulation, real estate registration, and land and property management.
In a short period of time, we have become a source of knowledge in these areas, and every year we welcome severaldelegations to brief them about our experiences and our efforts to develop national systems through courses, scholarships, and consistent training workshops.
How do you think Expo 2020 will impact Dubai’s property market? Will it lead to the development of new areas in Dubai?
Dubai’s hosting of this global event will have a great impact on real estate in the short and long terms. Dubai will reveal to
its visitors its distinctive features, strong infrastructure, and regulatory environment, which are the key factors investors are looking for.
After Expo 2020, we expect to see a new wave of companies and individuals seeking to expand their activities in the region who will find Dubai to be the perfect haven to reach their regional customers quickly and easily. This will increase the U.A.E.’s competitiveness economically, alleviating it to higher global levels.
The real estate market is poised for a new phase of growth in the run-up to Expo 2020, and Dubai will once again prove its ability to attract more foreign investments.
What are DLD’s future plans for Dubai’s property market?
All our plans are in line with our wise leadership’s vision and the government’s aspirations, especially the smart digital transformation in line with the Smart Dubai strategy. The services that DLD provides and is planning for are aimed at a fully integrated smart, digital transformation to achieve the objectives of Smart Dubai 2021 to transition to a paperless government, in line with the Dubai Government’s plan to be the smartest city in the world.
We have already eliminated our records section and switched to a smart archiving system that completely stopped traditional archiving operations. Our IT team has managed to convert more than five million files into smart format, transferring them to the new archiving system.
We strive to remain at the forefront of institutional performance and provide a model of what government institutions should do to keep up with the changes of the times. One of the most important achievements we made is the adoption of blockchain. We are the first government entity in the world to implement this technology, in line with Emirates Blockchain Strategy 2021 launched last October by HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Board of Trustees of the Dubai Future Foundation, and led by the Smart Dubai strategy.