Dubai's hot property market is undoubtedly becoming too
warm, even for regulators. On Saturday, the government of the emirate started
doubling property transaction fees from two to four %.
The judgment impacts freehold property, a popular investment
vehicle for foreigners.
Costs have risen drastically over the span of the previous
year, and the International Monetary Fund (IMF) recently advised policymakers
to consider additional laws to curb excessive price gains on Dubai Real estate.
Nick Maclean, Managing Director at CBRE, a world-wide
real-estate advisory, explained that balance between buyers that are purchasers
and customers who are short-term speculators was purely out-of balance.
"The authorities are thus absolutely right in proposing
several measures designed to support folks to take a longer term view in the
Dubai real estate," he explained.
The durability of the expensive price increase within the
property industry has been met with disbelief. There are issues of re-play of
the bubble that burst in 2008/2009 and pushed Dubai towards the point of
default is underway.
Jones Lang LaSalle (JLL), another real property consultancy,
underscored that slower growth would ultimately prove more valuable.
"The price of increases observed over the previous year
is really unsustainable and that while home prices and rents will continue to
improve over the following 12 months, the rate of increase will drop
relatively," its latest report stated.
A look in the numbers explains why. Info in the Dubai Land
Department also revealed new records in trade values on a single evening, also
topping 2008 amounts.
Sultan Butti Bin Mejren, Director General of the Dubai Land
Department, told journalists in late Sept the changes might help foster a
healthier market.
"The IMF warning came in accordance with this findings
and that is the reason why we believe that raising the costs will limit
speculation and protect from the bubble. We chose to raise these fees before
they even recommended it," he made clear.
The shift will not change the Dubai International Financial
Center (DIFC), a free area in the center of the city where the trade rate has
been 3.5 per cent.
Higher trade charges further translate into higher
government revenues before debt coming due over the next several years.
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