The global financial crisis has hit demand for real estate in Dubai from foreign investors, which make up a large percentage of buyers, while tightening liquidity has made home financing more difficult.
Developers and real estate companies are making hundreds of people redundant and projects in Dubai and abroad are being put on hold or even cancelled because of cash flow concerns.
Direct action is needed to ease the situation, according to a report from RichVille, a real estate asset management firm, which is part of Dubai-based conglomorate Tharaa Holdings.
It blamed the downturn in the market on banks, which have tightened lending conditions in recent months despite the UAE central bank making $32.7 billion available to the banking sector boost liquidity.
'The report points to the banks in Dubai for being responsible for the inactivity of the real estate market, even though the central bank has taken measures to support the banking sector and the economy, no direct actions have been taken towards the real estate sector,' a RichVille spokesman said.
It also calls for Dubai's Real Estate Regulatory Agency (RERA) to play a more active role in developing a rescue plan for the market and to take a leading role that surpasses regulating and documenting, to cooperating with the master developers, and government bodies.
Another proposition put forward is for developers to delay any upcoming payments by six months to avoid default and panic in the market. But this is unlikely as almost everyday a developer announces cutbacks, job losses and the postponement of projects.
