Dubai needs stricter rules to govern private developers, says builder

Dubai should have more stringent regulations to govern property developers in the market and ensure that they complete projects on time, according to the chairman of RSG.

“There should be more regulations in the market,” said Raj Sahni. “The government and Dubai Land Department should make it harder for private developers. Some people complain that Nakheel and Emaar do not have an escrow account. They don’t need an escrow account, they are government-owned so they will build.

“The worry is about the private developers and I would say that the law in Dubai should be tighter so that it cleans up the mess and brings in more genuine strong developers. For example, to do off plan selling there is a law by DLD that says the land should be fully paid for and you should put 20 per cent of construction amount into an escrow account. I would say it should be 40 per cent. You still need to filter a lot.”

Speaking to reporters, Sahni said that Dubai’s current rules had averted a bust in 2013 when real estate prices in Dubai jumped more than 30 per cent, buoyed by the optimism from Expo 2020.

Sahni, who has been operating in the Dubai real estate market since 1991, said that the current slowdown will be beneficial for the industry as it will weed out the weak developers.

His company RSG International launched its first residential real estate project Qasr Sabah last year and has sold out 95 per cent of all units. The residential development, located at the International Media Production Zone, was built at a total value of Dhs 450m.

The project was also completed 86 days ahead of schedule with the first units set to be handed over next week, he added.

Dubai’s property sales have steadily declined over the last three quarters, stabilising after a spell of high prices.

But Sahni said he was not concerned about the current slowdown in the property market.

“The slowdown does not worry me at all. We could have done four projects last year – we had the land bank and everything – but we wanted to first finish the project that we were working on and then start the other one. We are going to start construction on our second project in September. We are trying to finish 1,000 units by the end of 2017.”

RSG’s next project is also a residential development comprising of four buildings in Jumeirah Village Circle and will be built at a cost of Dhs 800m.

Sahni confirmed that he will continue to invest in Dubai’s real estate market and had plans to expand RSG’s footprint in the emirate.