The unrivaled growth of Dubai’s real-estate industry has stunned the world. As it grew, it witnessed a number of brokerage firms mushrooming in the city. Real estate became a popular employment sector as it was profitable owing to the new construction projects coming up and the number of people relocating to Dubai.
In 2007, the UAE Vice President, Ruler and Prime Minister of Dubai, His Highness Sheikh Mohamed bin Rashid Al Maktoum, formed the Real Estate Regulatory Agency (RERA) to ensure fair practice in the industry. This agency was set up to help landowners, tenants and all those involved in this sector to bring more investment and business. It is supported by the Dubai Land Department.
In September 2013, the CEO of the RERA remarked that there were too many real estate companies in Dubai. The number was higher than what was required for the city of Dubai. In fact, a total of 2,205 property firms were recorded in 2014 and 567 new ones commence operations that same year. This prompted RERA to make the existing rules and regulations more stringent and add a few more as an attempt to bring down the numbers and maintain quality.
The new measure introduced in 2014 were:
a. The pass marks for the tests for renewing licenses was brought up from 75% to 85%. This was to ensure that the brokerage firms had maximum knowledge about real estate laws and regulations.
b. Broker cards were introduced that were to be linked to an Emirates ID.
c. For new real-estate companies in Dubai, a new rule was introduced that allowed them to employ not more than four agents in the first year. Any increase in the number of agents the following year depended on the business of the firm in the first year.
d. RERA decided to take strict actions against those Dubai real estate companies that failed to conduct any business or transaction for six to twelve months. A warning letter is sent to such firms and if no improvement is recorded, RERA has decided to cancel the registration of such companies.
In addition, the tests for obtaining new licenses and renewing old ones were made more difficult so that the companies took their business seriously. This was done to maintain the industry standards and quality.
In spite of all of these measures, setting up real estate companies in Dubai is a profitable venture as the market has been growing at a steady rate. The RERA and the Dubai Land Department work together to ensure that the industry grows positively and is beneficial to all those involved in it.