Property developers are seeing more defaults by home buyers and property investors, who are caught between declining prices and a shortage of lending by banks, Dubai's property regulator said today.
Marwan bin Ghalita, the chief executive of the Real Estate Regulatory Authority (Rera), said some developers had reported up to 40 per cent of buyers falling behind on their payments where units were sold off-plan by developers before they are completed or in some cases where construction has yet to even begin.
Most cannot sell the units they have purchased because buyers are scarce. But they cannot continue to make payments because banks are tightening lending amid the global credit crisis or will not pay because they are concerned the project may never be built. Some are simply walking away and leaving their downpayments. Defaults are particularly high among speculators who bought properties without financing, aiming of re-selling and pocket a quick profit.
The federal government is now moving aggressively to try to reinvigorate mortgage lending, while many developers are adjusting installment plans to accomodate some delay in payments before default. But Mr Ghalita said defaults could climb to the 40 per cent level in the off-plan, secondary market for property "if banks do not provide finance and developers do not change payment plans by the end of the year since payments are due," Mr Ghalita said.
Precise figures on defaults and overdue payments are not available. But Mr Ghalita said he saw evidence of rising default levels in his department's monitoring of what is known as the "trust account," which is controlled by Rera and takes in payments from buyers until a project is completed.
"In projects where the percentage of speculators is high, there are cancellations," he said in an interview in his Dubai office. "But in projects with end-users, cancellations are less than 10 per cent," he said.
According to Rera statistics, there are 922 residential and commercial property developments in Dubai, of which 479, accounting for 46,000 units, are under construction.
Industry officials and analysts said rising default rates may push prices lower in the short-term, That could help refocus the market on end-users rather than speculators over the long term, but could put stress on many developers as their cash-flow from investors dries up even as loans are tough to obtain.
"We would obviously see more downward pressure on real estate prices," said Robert McKinnon, the managing director of Al Mal Capital, "The closer people get to defaulting, the more they panic. Developers themselves will have to take a lot of these assets, that they recognise as sold back, on their books. You are going to see a hit to their earnings also."
Developers say the government is tracking default levels closely and could make finance available to companies with viable developments if necessary. But prices may continue to adjust until new buyers enter the market in significant numbers. "I believe eventually that the issue is actually more about affordability," Mr McKinnon said. "Real estate prices are going to come down to a point where consumers or end-users find it attractive for them to buy."
Buyers tend to fall behind on payments for several reasons. Some cannot afford to keep up payments because they do not have the cash and cannot borrow. Others decide to stop paying out of a lack of confidence in the developer, or because they fear the value of the asset has already dropped below what they agreed to pay for it.
The Government has begun to address the shortage of credit from banks by merging the two largest home loan companies into a state-run bank, and launching a new government-backed mortgage company.
Mr Ghalita said the government has also moved to bolster confidence in projects by barring developers from cancelling sales contracts if construction had not started. The government has also moved to discourage speculators from withdrawing from purchase agreements with a new rule that buyers must forfeit 30 per cent of the property's value if they default. Buyers had previously forefeited just 30 per cent of what they had already paid, according to lawyers.
Some investors argue the rule provides an incentive to developers to cancel projects and walk away with the money. Mr Ghalita said government will prevent that by requiring approval from the Land Department before any project can be cancelled. "The Land Department is not allowing cancellation without evaluating the whole project. If we cannot reach an agreement, they will have to go to the court to force the cancellation, which will take a long time," he said.
Mr Ghalita said the authority was acting as a mediator and was negotiating with developers who have run into financing problems. In the meantime, he said the rise in missed payments underscores the urgency of government efforts to get the flow of mortgage lending going again.
"I think finance is important for off-plan market continuity," he said. "The market will change by itself. Developers will be smart enough to start a project, get the finance, then think of selling or keeping it for rent. This will happen 100 per cent. They will not depend on off-plan sales anymore. For sure."
ngillet@thenational.ae
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Manchester City 4
Otamendi (52) Sterling (59) Stones (67) Brahim Diaz (81)
Real Madrid 1
Oscar (90)
COMPANY%20PROFILE%20
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
TRAINING FOR TOKYO
A typical week's training for Sebastian, who is competing at the ITU Abu Dhabi World Triathlon on March 8-9:
- Four swim sessions (14km)
- Three bike sessions (200km)
- Four run sessions (45km)
- Two strength and conditioning session (two hours)
- One session therapy session at DISC Dubai
- Two-three hours of stretching and self-maintenance of the body
ITU Abu Dhabi World Triathlon
For more information go to www.abudhabi.triathlon.org.
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
How it works
Each player begins with one of the great empires of history, from Julius Caesar's Rome to Ramses of Egypt, spread over Europe and the Middle East.
Round by round, the player expands their empire. The more land they have, the more money they can take from their coffers for each go.
As unruled land and soldiers are acquired, players must feed them. When a player comes up against land held by another army, they can choose to battle for supremacy.
A dice-based battle system is used and players can get the edge on their enemy with by deploying a renowned hero on the battlefield.
Players that lose battles and land will find their coffers dwindle and troops go hungry. The end goal? Global domination of course.
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APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Getting there
The flights
Flydubai operates up to seven flights a week to Helsinki. Return fares to Helsinki from Dubai start from Dh1,545 in Economy and Dh7,560 in Business Class.
The stay
Golden Crown Igloos in Levi offer stays from Dh1,215 per person per night for a superior igloo; www.leviniglut.net
Panorama Hotel in Levi is conveniently located at the top of Levi fell, a short walk from the gondola. Stays start from Dh292 per night based on two people sharing; www. golevi.fi/en/accommodation/hotel-levi-panorama
Arctic Treehouse Hotel in Rovaniemi offers stays from Dh1,379 per night based on two people sharing; www.arctictreehousehotel.com
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
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Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
WRESTLING HIGHLIGHTS
HOW TO WATCH
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Company%20profile
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Killing of Qassem Suleimani
The specs
Engine: 2.0-litre 4-cylinder turbo hybrid
Transmission: eight-speed automatic
Power: 390bhp
Torque: 400Nm
Price: Dh340,000 ($92,579
SPECS
Toyota land Cruiser 2020 5.7L VXR
Engine: 5.7-litre V8
Transmission: eight-speed automatic
Power: 362hp
Torque: 530Nm
Price: Dh329,000 (base model 4.0L EXR Dh215,900)
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
How to report a beggar
Abu Dhabi – Call 999 or 8002626 (Aman Service)
Dubai – Call 800243
Sharjah – Call 065632222
Ras Al Khaimah - Call 072053372
Ajman – Call 067401616
Umm Al Quwain – Call 999
Fujairah - Call 092051100 or 092224411
THE%20SPECS
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The specs
Price, base / as tested Dh1,100,000 (est)
Engine 5.2-litre V10
Gearbox seven-speed dual clutch
Power 630bhp @ 8,000rpm
Torque 600Nm @ 6,500rpm
Fuel economy, combined 15.7L / 100km (est)
Company%C2%A0profile
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Leaderboard
64 - Gavin Green (MAL), Graeme McDowell (NIR)
65 - Henrik Stenson (SWE), Sebastian Soderberg (SWE), Adri Arnaus (ESP), Victor Perez (FRA), Jhonattan Vegas (VEN)
66 - Phil Mickelson (USA), Tom Lewis (ENG), Andy Sullivan (ENG), Ross Fisher (ENG), Aaron Rai (ENG), Ryan Fox (NZL)
67 - Dustin Johnson (USA), Sebastian Garcia Rodriguez (ESP), Lucas Herbert (AUS), Francesco Laporta (ITA), Joost Luiten (NED), Soren Kjeldsen (DEN), Marcus Kinhult (SWE)
68 - Alexander Bjork (SWE), Matthieu Pavon (FRA), Adrian Meronk (POL), David Howell (ENG), Christiaan Bezuidenhout (RSA), Fabrizio Zanotti (PAR), Sean Crocker (USA), Scott Hend (AUS), Justin Harding (RSA), Jazz Janewattananond (THA), Shubhankar Sharma (IND), Renato Paratore (ITA)
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
MATCH INFO
Watford 2 (Sarr 50', Deeney 54' pen)
Manchester United 0
