Real estate reforms vital for Dubai's commercial space

The real estate sector in Dubai is experiencing some disruption and it needs the right legislation to cope with the changed environment. It's especially true for commercial space where tenants are feeling the heat. No wonder then that we are seeing more vacant spaces in commercial buildings than before.
The current situation is different from what Dubai experienced before. In the past, the retail sector was flourishing and commercial space was making huge profits, which allowed the owners of shopping centres and buildings to spend more and also charge more for various innovative initiatives. The businesses, in turn, raised prices of their goods which impacted their competitiveness and gave an advantage to other markets in the region.
Now with e-commerce looking up and online shopping becoming popular as they offer competitive prices to people who prefer to pick and choose what they want from the comfort of their homes, commercial space is clearly at a disadvantage. Perhaps, it's time to evaluate current legislations and find solutions that are in the interest of the commercial real estate sector and consumers. This is not an issue that can be left to the owners of the malls or other real estate developers to resolve.
The government is keen on changes as seen by recent initiatives taken by the Supreme Committee of Legislation in Dubai. Ahmad Saeed bin Mashar Al Muhairi, Secretary General of the Supreme Legislation Committee, in September had said that a new law to protect the rights of tenants and landlords as well as increase the competitiveness in the real estate sector would be introduced by the end of the year.
The proposed law classifies rental contracts into four types of property: residential, office, commercial, and industrial. I must state here that the proposed regulation is well intentioned but it hasn't seen the light of the day yet.
This piece of legislation could fix many problems faced by owners who suffer from delayed projects while also shielding them from reneged payments. But there should be provisions in the legislation that work for tenants, too. The new law should distinguish between malls according to location and footfall. Naturally, such pragmatic changes could annoy some businessmen and owners, but it would be in the interest of customers, businesses, and Dubai as a whole.
The proposed legislation could make the real estate sector an even playing field for all stakeholders. We need to make the system more dynamic to keep pace with changes in the sector. Delays in reforming real estate could lead to irreparable damage. It could push businessmen to look for opportunities elsewhere in the region. Other cities in the region are fiercely competitive offering various sops to investors. And if businesses make such a move, it will be hard to get them back.
Dubai has been a haven for investors; companies look at this city to open their regional branches. We have been successful with economic reforms thus far, but to ensure that we stay ahead in the game, we need to keep moving with these critical real estate reforms to help business stay here and make them sustainable and profitable.
-malzarooni@khaleejtimes.com