The Emirate has been reeling in the last few days over the sheer scale of cutbacks and cancellations as tighter mortgage lending, job losses and a liquidity squeeze has forced developers to scale back.
'This is not a good time to start a new project if you don't have the liquidity to construct,' said Marwan bin Ghalaita, chief executive of the Real Estate Regulatory Authority, who also sits on the recently formed government council which meets regularly to discuss the effects of the global downturn on the economy.
He also welcomed mergers, especially for smaller developers. 'If you look at the market a merger between smaller companies would give it confidence. I always support good mergers in any sector if it adds value to the sector,' he said.
'Slowing down is very important and this is what we at RERA asked the developers to do about a year back. Slow down and review is very important for the market,' he added.
He believes that the only market that was truly suffering in Dubai was that for off-plan properties. 'This is because there are a lot of speculators on some of the projects. Some of the banks are not dealing with this crisis professionally so they stopped financing,' he said, adding that some developers were also asking for too high a price.
He predicted that prices for 'affordable' off-plan properties could pick up in the second quarter or 2009 if banks increase lending. A new law on the registration of off-plan property sales is expected to come into force next week. New rules for time shares are also being finalised.
'From now on people will be selective in where they put their money. It's not like before where people came to buy anywhere,' he added.
Dubai is also witnessing an increase in defaults on high-end properties as financing conditions worsen.
