A property agency has launched a service to help investors of off plan property in the United Arab Emirates recover the value of their purchases.
The Smith and Ken agency said its Real Estate Recovery Scheme works via a like for like credit note to the value of what they have already paid against one of its properties.
‘There is always an element of risk involved when investing in off shore development plans even though you do a thorough background check on the developer and the property. There are situations that are beyond one’s control like worldwide economic challenges or the developer going bust,’ said Benjamin Smith, the company’s chief executive officer.
‘Our Real Estate Recovery Scheme (RERS) aims to help investors in such unfortunate circumstances. Whether they have put down a 10% deposit on the property or paid up a larger percentage, we will help them to recover their money by swapping units in most delayed or cancelled developments for thriving completed properties in prime UAE and international locations,’ he explained.
Once an application for RERS is approved by Smith and Ken, the company invites the investor to choose a new property, and once it is done, Smith and Ken deducts the amount the investor has already paid from their new apartment, office space or plot of land.
‘Apart from more financing options and government regulations, innovative schemes like RERS are key to a recovery in the property market,’ Smith added.
The UAE residential property market has been hard hit by the global downturn with prices in places like Dubai falling by up to 50% since their peak at the end of 2008.
Smith believes the recovery is now underway. ‘There have been many distressed cases but there is hope, and signs of recovery are already there. Average residential property prices in Dubai rose by 2% in the first quarter of 2010 compared to the same period last year. Prices have now risen 4% since the last quarter of 2009 creating confidence in the market,’ he said.
‘Economic prospects are looking better. According to the International Monetary Fund, the UAE, after a small contraction in 2009, will likely post positive growth in gross domestic product (GDP) this year. The National Bureau of Statistics expects GDP to touch 3.2%. Dubai is also all set to house the Gulf regional branch of the world’s first specialised real estate exchange operated to serve the Middle East and North Africa. Developments like these are a welcome boost for investors,’ Smith added.