Thursday, June 24, 2010

Potential Advantages of a Specialized Real Estate Regulator

Focus on Real Estate Series

Oman’s prudent approach to real estate development has been well rewarded over the few past years, as the Sultanate’s selective focus on sustainable, mainly high-end projects has enabled Oman’s real estate and tourism sectors to thrive while other countries in the region have struggled. As the Sultanate continues to develop its real estate sector, one possible future addition to consider would be a specialized regulatory authority for the real estate sector. Properly structured, a specialized regulator could further increase coordination, efficiency, and responsive oversight across the sector. Generally, a real estate authority is a specialized body that is actively involved in all aspects of the real estate sector and has close working relationships with both higher governmental officials on the one hand, and private participants in the real estate sector (e.g., developers, landlords and tenants) on the other hand. Functions that a real estate regulatory authority may perform include:
  • drafting regulations in accordance with the broader laws (e.g., Royal Decrees) that carry out the government’s objectives while also being attuned to issues facing market participants “on the ground”;
  • certifying and licensing property developers to help maintain the integrity of the sector;
  • adopting streamlined, unified processes that make the sector more user-friendly to all market participants and provide comfort to investors;
  • coordinating and providing centralized access to real estate records and data; and
  • helping to promote housing quality standards and carry out other governmental objectives, such as access to affordable housing.
In the UAE, some of the Emirates, such as Dubai and Ras al-Khaimah, recently have established regulatory authorities to revitalize their real estate sectors in the wake of domestic real estate downturns. Over the coming months and years, other jurisdictions may choose, instead, to establish specialized regulators as a preemptive measure, to help make their real estate sector more robust, sustainable, and better able to withstand any future market turbulence. With its recent successes in privatizing the water and electricity sectors, Oman has gained valuable experience in establishing specialized sector regulators, such as the Telecom Regulatory Authority and the Authority for Electricity Regulation. As Oman’s real estate sector continues to develop in the coming years, one option worth considering to help manage the growth of that sector would be a specialized real estate regulatory authority.