Over the coming months, real estate companies will be given details about what the charter means, prior to putting the final touches to a final draft.
Next year real estate firms will be given time to make necessary changes to their operations to fit with new regulations which will become obligatory in January the following year.
The charter proposal is part of nine initiatives launched by the Department to spur a recovery in the emirate's battered property market where prices have slumped more than 60% from peak levels.
Officials said the charter was designed to ‘achieve a qualitative leap in the performance of real estate developers and increase the transparency of the market’. It also aims to attract foreign investments, raise the level of confidence and enhance the efficiency of real estate companies, DLD said in a statement.
The charter will call on developers to disclose details regarding their activities, progress of their projects, financial solvency and ability to manage quality and risk.
‘We have managed to carefully formulate corporate governance standards tailored for real estate companies,’ said Sultan Butti Bin Mejren, director general of the Dubai Land Department.
A committee of professionals will be set up to help draft the charter and conduct a survey of developers and investors in a bid to choose the best corporate governance standards, the statement said.
‘The lack of an established culture of governance in the market in general and in the real estate market in particular, necessitates the application of the charter on three phases,’ said Marwan bin Ghalita, CEO of Dubai's real estate regulator RERA.
‘Developing and strengthening corporate governance practices is a prerequisite for protecting property rights, attracting and ensuring the loyalty of investors, developers, brokers, lawyers and managers of property owners' association in addition to residents, consultants and stakeholders from other entities. This will surely boost confidence in Dubai's real estate sector,’ he added.
Real estate corporate governance in Dubai will focus on seven standards or criteria, including requiring companies to disclose details regarding the size of their projects, progress, contracts and market sales.
It will also assess the ability of the developer to complete and manage the project and will demand the provision of quarterly financial and accounting reports of developers.
