“The full impact of the investor visa is still to be felt and with some uncertainty remaining over the actual physical award of visas to home owners and a lack of clarity to specific conditions relating to the inclusion of family members,” Matthew Green. Head of Research & Consultancy, UAE, CB Richard Ellis, told Emirates 24|7.

Craig Plumb, Head of Research Mena, Jones Lang LaSalle (JLL) says there was increased interest when this announcement was made back in June, but the fact that no details have subsequently been released has proven to be a negative.

“We have seen no visas issued under this new regulation yet – so it's not really helping the market.”

Murray Strang of Cluttons adds the three year visas for any property purchased above Dh1 million has not encouraged the influx of buyers we had expected, but has brought more confidence to market.

“We welcome any movement by the government to stimulate the property sector.”

In June, the UAE federal government has extended visa for real estate investors from six months to three years. This website had reported then that a number of services - such as applying for a local driving licence, personal loans and getting admission to schools – will likely be opened to holders of these visas. So far, no details of the new visa have been issued yet.

A Department of Naturalization and Residency Dubai call centre employee told this website that they had not received any update on the new visa and were still issuing six-month visa to property investors.

''A year on from our successful return to the UAE’s home finance market, our positive financial results confirm that Tamweel is firmly back in business,” said Abdulla Ali Al Hamli, Chairman of Tamweel.

“2011 witnessed significant success for Tamweel as evidenced by resuming new business origination and the resumption of share trading. With our solid financial footing and proven business model, Tamweel will continue to play a key role in supporting the long-term recovery of the country’s real estate sector.”

Key to the company’s success in 2011 has been the launch of a range of new products, including 'Home Finance Plus', the UAE’s first integrated home finance programme, which provides homeowners with a wide range of essential services, such as free residential maintenance and free relocation services at no additional cost.

Varun Sood, Acting Chief Executive Officer of Tamweel, said: “Tamweel recognises that the needs of end users have changed in recent years and, accordingly, we have developed products with the right mix of value added services and the highest level of after-sales support.

"Against a backdrop of tough global economic conditions, our pioneering approach has enabled us to recapture market share without sacrificing our commitment to booking a high-quality portfolio of end users and properties. Our success in 2011 is a strong reflection of the positive market sentiment towards the Tamweel business model.”

''As the flight to quality continues in 2012, there will be an emphasis on better quality projects across all sectors," the report said. "There will also be a greater distinction between winners and losers as performance will vary greatly with preferred buildings outperforming others in an increasingly two-tiered market."

With real estate values having fallen more than 60% in Dubai since 2008, JLL believes that prices are near the bottom but will still take another year to achieve growth across all sectors. "2012 will be the year of recovery for certain projects, while 2013 will be the year of recovery for the market as a whole," said Craig Plumb, JLL's head of research for the Middle East and North Africa.

In terms of supply, JLL predicts that 23,000 units will enter the Dubai market this year as developers continue to consolidate projects and focus more on commercial viability. The new stock is expected to further boost competitiveness and force developers to target needs of occupiers more closely.

"Lower prices, more choice of higher quality product and its role as a regional safe haven will increase the attractiveness of the UAE market to both occupiers and investors in 2012," Plumb noted. "We can expect 'more' positive signals from this year, with some of the key words being affordable housing... new realism, tenant friendliness and sustainability across the UAE real estate market."

Commenting on the UAE real estate market as a whole, Alan Robertson, JLL's CEO for the Mena region, said the sector is evolving into a more mature marketplace where valuations and property and asset management will become increasingly important for occupiers, developers and investors.

However, he also warned that the market will continue to be impacted by regional and global events. "As we enter 2012, the real estate sector will inevitably be susceptible to any potential geo-political changes within the region, with the recent escalation of rhetoric between Iran and the West being the major cause of uncertainty.

According to the website of a Dubai-based business magazine, the Palm’s security staff received a 22-page document, which held the names of 1,386 owners on the Shoreline development that have not paid their service charges in full.

“I cannot make everybody happy,” is what the Nakheel Chairman had to say last month when Emirates 24/7 asked him about the beach access fee to be imposed on residents of Nakheel’s Shoreline apartments on the Palm Jumeirah.

“Read your contracts. We checked legally ... went to Rera. We abide by the law and respect the law,” Nakheel Chairman Ali Lootah told this website.

“Owners or tenants living in these properties have now been denied access to any facilities, and were warned they could be arrested if they attempted to enter the pool and gym areas,” said a report on Arabian Business website today.

With a number of people staying in each of those apartments, the actual number of affected residents is likely to be around 3,000.

According to a resident-owner of a Shoreline apartment, from December 1 onwards, all residents have to produce a “new” photo access card to use the Shoreline facilities, while the guests will be charged on a “per day basis”. This includes beach access from the apartments.

Some residents have claimed that Nakheel plans to charge Dh5,000 a year to access facilities and plan to open up membership to non-tenants at Dh12,000 per year.

“We are using our old cards to access the gym, swimming pool and the beach, but from December 1, we will need to get our new access cards. The security will also have a log book and the names of the residents,” FS, an Iranian, who wished not to give his full name, told Emirates 24|7before the deadline.

Under the new initiative called Taqseet (installment), the buyer and the seller will agree to a price for a completed unit, which will be paid in installments over an agreed period.

The transaction will be supervised by Arra, with the agency immediately issuing a title deed in the name of the buyer. However, the title deed will be pledged with the seller and released onve full payment is made.

Even though property sales have shot up in the emirate since May this year, Arra has come to the aid of real estate developers stuck with finished stock.

Sales registration fee under the scheme will be one per cent of the contract value. Although not disclosed whether the fee will be split equally between the buyer and seller, market sources say the fee will be paid by the buyer. The seller will be exempted from paying the fee.

“This initiative comes within the framework of our efforts and endeavor to develop procedures able to cope with the rapid changes in the market and capable of encouraging and facilitating the sale and purchase of real estate units in the emirate of Ajman,” Yafea Eid Al Faraj, Executive-Director, Arra, said.

Developers in Dubai are also offering end-user financing but these schemes do not fall under the purview of the Real Estate Regulatory Agency.

According to market sources, six to seven towers have been completed and handed over this year. Although the total number of completed, but unsold units are not available, sources say one-bedroom apartment is now selling for less than Dh200,000 in some projects.

The agency’s website currently lists 159 registered projects.

In October, Arra said the sales and purchase transactions on real estate units in completed and under construction projects recorded an increase of 373 per cent during the third quarter compared to same period last year, while transactions for six months, starting May, rose by 873 per cent compared to the same period last year.

The climb has been attributed to several factors including the UAE Cabinet’s decision concerning the property visa and Arra’s role in solving real estate disputes with a total value of Dh1.4 billion.

In September, Yafea Eid Al Faraj, Executive-Director, Arra, toldEmirates 24|7 that the agency was offering investors in stalled project a swap option at the current market price and was working on making the list of cancelled project public.

“We are seeing that the mentality of the investors has changed. It is not like before when they would seek a refund. They now understand that moving court is a costly process and the chances of getting back their investment is slim even if they get a favorable judgment… And so to have something is better than have nothing.”

Property prices in the emirate had fallen by 20 per cent this year compared to 2010, but prices were likely to stabilize in 2012, Al Faraj had said.

Although leasing activity, up significantly this year from 2010, is expected to remain strong next year, rents will "again come under further downward pressure" with the release of more homes, Asteco said in its new report.

“… the delay in handover this year will only exacerbate the volume of new supply delivered in 2012, and consequently, rents will again come under further downward pressure,” Elaine Jones, Chief Executive Offficer, Asteco, said.

The new supply will consist of 18,800 are apartments and 5,950 villas. Over 12,000 units are expected for completion in the first half of the year.

The report says that of the 12,000 new units to be delivered in the first half of the year, about 8,000 of these units represent a significant improvement in quality compared to existing stock in the market, which will provide tenants as well as buyers with significantly better value-for-money options.

A total of 10280 units were delivered in 2011, of which 6,680 were apartments and 3,600 were villas.

Most of the new units will be delivered in Saadiyat Island, Reem Island and Raha Beach.

Developers are not “genuinely” trying to hand over building management to the owners association because of the financial gains associated with it, say experts.

“I don't think there is a genuine attempt being made to hand over to the owners. As other revenue streams dry up, developers see the opportunity of making a profit from service charges/interim owners association (IOA) so there is little incentive to register the owners association as required by the regulations,” Graham Yeates, Head of Owners Association Management, Cluttons, told Emirates 24/7.

Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, mentions that developers still continue to resist giving up control of their buildings.
 
“It is difficult to predict how much money they are making off of managing buildings, as they do not disclose such information. But presumably, the only reason they would continue to want to control buildings is for financial gain.”

Brent Baldwin, Associate, Hadef & Partners, however, has a different view.

“There is a growing recognition among developers that these laws are here to stay. We should see many more developers complying over the next 12 months.” 

Due to the scrutiny undertaken by boards and Real Estate Regulatory Agency (Rera) of budgets, Kent A O'Brien, CEO, SG Community Management Services, states that the environment has changed.
 
“Many developers are stating they want to release themselves from the OA issues and hand over the building. Those that cling to the past will be in conflict with the OA and swiftly removed once the OA is registered.”

In August 2010, Cluttons estimated that Dubai would have almost 2,000 IOAs. According to Rera, 271 IOAs have been registered with it while it expects IOAs to manage nearly 70 per cent of the freehold properties by year-end. The regulatory agency had set an October 2010 deadline for real estate developers to complete all documentation process and register owners’ associations. 

Despite this, slowly, and in certain pockets, the market appears to be stabilising, but real estate experts contend that the government should be doing more to restore the confidence of investors.

Chief Executive Officer of Greenstone Equity Partners, Alex Gemici, says the market will not stabilise unless foreign investors return to the market. "For this to happen, RERA needs to do more to help protect the contractual rights of the purchasers in limbo on uncompleted units," he said. "One way of doing this is by publishing all cancelled projects and forcing developers to perform their contractual obligations. Unless foreign investors feel that their rights are protected in an equitable manner, they will continue to stay away from the market."

Regarding the government's proposed plan, announced in June, to extend visas for developers, Gemici believes it will help, but "not enough".

"The real shot in the arm for the market will be: i) a full visa to a property owner as long as they own a property in the UAE, ii) expansion of free zones, iii) elimination of the 51% local ownership requirement for on-shore businesses, and iv) more transparency and predictability on civil litigation, maybe through the option to use DIFC courts on all real estate related civil litigation at the request of one of the parties as opposed to mutual consent as it is now," he argued.

Gemici also added that on the regulation front, a law restricting the resale of a property contract (flipping) prior to the final delivery of a property would be needed to "avoid another bubble".

Cluttons LLC sales and leasing manager, Mario Volpi agrees that the change of law in regards to visas "is definitely a step forward", adding "any plans to offer incentives to buy properties will always get our vote".

However, he also believes that more needs to be done. "The government can always do more," he said. "Positive messages from them are a help and opening up more credit finance from banks in terms of mortgages and lower interest rates would be one solution.

"The government has been busy trying to kick start the UAE property market for a while now, but to date their efforts have not been as successful as they had hoped. Confidence is slowly returning but the world economy is hampering all attempts at the moment."

Investor protection law earns praise

An issue that experts have been fairly unanimous in their support for has been the Real Estate Investor Protection Law. It is aimed at providing clarity on various issues such as steps that an investor can take in case of project delays and how an investor can cancel the contract if the developer fails to fulfil his contractual obligation.

"The implementation of this law can only be good news for investors and owner occupiers alike," Volpi asserted.

But while these moves, should they come into fruition, are seen as positive - if not necessarily far reaching enough - there is uncertainty over whether the Tanmia initiative, set up in a bid to complete stalled projects, will help.

Gemici believes that it should be local lenders determining the financial viability of a project.

"The market does not need new supply which gets completed due to government support as opposed to real market demand," he added. "When there is sustainable and real demand with waiting lists, the financing from non-government sources will become available."

From the investors point of view, Volpi said the Tanmia initiative was an excellent way of boosting the confidence of buyers of properties that ordinarily may have been delayed or shut down by the government.

"From a market point of view this initiative will further cause price reductions as the oversupply of properties will continue to hamper any recovery in terms of price," he said. "Remember these towers/projects were launched at the height of the market when no one was in recession and Dubai had never heard of a property downturn."

So while moves are being made by Dubai's authorities to restore confidence in the market, it would seem that there is still some way to go.

Both Gemici and Volpi asserted their belief that
oversupply would be an issue, with Gemici adding that he believes less desirable locations would continue to lose value through 2012, up to 25% in some cases.

Volpi contends that the apartment market will remain soft for some time due to the "continual handing over of towers", but that the villa market has reached the bottom in some instances, with even signs of price increases in some areas.

But ultimately, with fluctuations and continual supply, many prospective buyers remain dubious about returning to the scene of the crash, even if they may be at last able to turn and look at the fallout from afar. "I think that investors are uneasy about the future direction of prices, oversupply and regulatory uncertainty," Gemici concluded.