Build quality seen as looming threat to Dubai property market

Garbutt, whose company monitors and inspects construction projects for Dubai's Real Estate Regulatory Agency (RERA), said poor quality is a growing problem that poses a greater threat to the market than oversupply or lack of regulatory standards.

"Unfortunately at the moment the way we see it there are significantly more poor buildings than good ones in Dubai," Garbutt told AMEInfo.com. "We may be in the midst of a global recovery with banks starting to lend again and investor confidence beginning to grow, but if the buildings are falling apart, no one is going to want to invest in them."

"Banks are also being put at risk since they are lending and providing mortgages based upon valuations that do not properly survey and assess the quality of the building. Both purchasers and the banks are relying only upon the valuation survey when they should also take into consideration the quality of the unit and building by also getting a condition survey, the findings of which will often have an impact upon the valuation," he added.

Garbutt said the poor quality in the Dubai market stems from a lack of proper controls, a desire to build quickly and cheaply, and poor property management after buildings are handed over.

"Often the property management side of it cannot be done effectively because of the poor construction in the first place and the lack of time there had been in handing these buildings over to the home owner's association," he said. "It doesn't give the building a chance really."

Not an isolated problem

Garbutt says the problem is not isolated to one specific developer or neighbourhood in Dubai. "You will see that some developers have good buildings in their portfolio and yet the same developer will also have some poor buildings. A lot of it depends on which contractors and consultants were engaged on the building during the construction phase, or even more specifically which individuals in those companies were involved on the buildings at that stage," he said.

For now, perceptions about quality in the Dubai market are mostly favourable, Garbutt says, but he warns that a completely different picture emerges if you talk to certain owners or tenants. "There are some buildings in Dubai that have serious issues and if you speak to people living in those areas they are not happy. And the longer this goes on, the more these buildings will deteriorate further and you end up in a downward cycle. These buildings will then stop performing as assets and become liabilities, and if the city has more liabilities than assets, then from a real estate perspective this negatively effects all property and investors will be put off significantly," he said.

Despite the gloomy assessment, Garbutt says it is not too late for Dubai's property sector to avoid gaining a harmful reputation from which it cannot recover. "Realpoint have already taken steps to prevent this and with the support of RERA we are grading buildings based upon quality and carrying out technical building completion audits and surveys that will raise the quality of construction and enable more effective building management," he noted.

However, Garbutt warns that more needs to be done to correct these buildings to ensure that the situation improves. "If these issues are not addressed in the next five to ten years then it could have a very negative impact on the market. Ultimately, people will only remember the buildings that are causing problems, and not the good ones," he said.