Good regulations lead to solid market

Comment The financial pain has been made much worse by the lack of an adequate regulatory framework.

The property markets of the Emirates have been hit hard by the global recession, but the financial pain has been made much worse by the lack of an adequate regulatory framework. During the boom, developers were allowed to launch projects with nothing but a small registration fee, an artist's rendering and a sales team. Buyers were allowed to obtain home financing of up to 97 per cent of the cost of a property and many of them bought more than one apartment they could not afford as speculative investments.

Now those risky moves are coming back to haunt both sides. Legal disputes have multiplied between banks, developers and buyers. But if you speak to lawyers working in the sector, filing a legal proceeding is an ambiguous affair. New laws, such as those outlined yesterday by the Dubai Land Department, can come at any moment and change the outcome of a case. What is more, the laws often come without the detailed regulations that are necessary to apply them in certain complicated cases.

The legal system will not be able to rid the property sector of bad elements until regulatory boundaries are established. To get property sales going again, buyers, developers and banks need to feel confident that there is a fair balance in the marketplace. New laws are a necessary development and are to be applauded, but the authorities need to give participants in the market a sense of closure before it can begin moving forward again.

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