Funding shortfall could lead to part ownership

Funding shortfall may require an increasing number of private and single-tower developers to offer part ownership options to investors in their projects, according to experts.

A few developers in Dubai such as Cirrus Developments are offering unit purchasers the option of becoming a shareholder in the project. In March, Cirrus presented a restructuring proposal to the purchasers of Aquarius Gate project, which will convert their status from "unit purchasers" to "shareholders" in new project company.

Speaking to Emirates Business, Chet Riley, Equity Research, Middle East, Nomura International, said: "In attempting to schedule installments against the pace of construction and enforce minimum requirements before projects can be registered – the resultant funding shortfall will require an increasing number of private, single tower developers to attempt this type of structure. There is a form of regulatory arbitrage being developed here and the consequences have probably not been fully explored yet by Real Estate Regulatory Agency (Rera)."