New Law in Dubai Will Hurt Small Property Investors

Yet another law has been introduced in Dubai to protect the developers against defaults by small investors. Law Number 9 of 2009, announced recently by the Dubai Land Department and Real Estate Regulatory Agency (RERA), introduced a sliding scale to determine how much money a property buyer who defaults on payments will end up losing.

The new law favors developers with projects that are well under way or near completion. For instance, if a project is at least 80% complete and a buyer defaults, the buyer loses all the money they had paid and the developer can resell the property.

As usual, this hastily introduced law is poorly thought out and will almost certainly mean another group of unhappy investors. Already the laws favor the developers to such an extent that there are now several groups forming in an effort to protect themselves. This new law is so open to abuse as to be almost carte blanche for any developer with a part finished project to insist on keeping any and all monies paid – along with the property.

Anyone would think the developers are all owned by the government of Dubai……… Oh wait. For those small investors who feel they have been given the short end of the stick, or if you are thinking of investing in Dubai, there is a group at google groups formed to discuss the problems being faced – and perhaps salvage some cash. The groups are here -

http://groups.google.com/group/dubai-property-investors

Simon Azzam of Union properties is particularly pleased with the new law. “I believe the new law is going to help a great deal. The intentional defaulters will think twice before defaulting. I believe that the number of defaulters is going to drop dramatically,” he said.

Not seeing it myself. Squeezing the bottom end of the market in this fashion is bound to lead to long term lack of confidence in Dubai. Already investors are bailing as fast as possible and by all accounts Dubai will be all but deserted over the next year or two. The summer is approaching and the ex-pat exodus is likely to increase when school breaks up.