Taylor Scott International News
Dubai acts to curb property speculation Issac John / 27 September 2013 The Dubai Land Department on Thursday said it would be doubling registration fee for real estate transactions to four per cent of the sale price from two per cent, effective October 6. Sultan Butti bin Mejren, Director-General of the Land Department, said the hiked fee structure, charged equally to the buyer and seller of a property, was aimed at discouraging excessive speculation in the property market, which has seen a major pick-up over the past few months by recording a big surge in transactions, prices and rentals. So far this year, real estate transactions in Dubai’s resurgent market totalled Dh162 billion, up from Dh90 billion in the same period a year earlier. Mejren said the new registration fees covers all types of property transactions in Dubai except for the industrial sector, including warehouses. Quick and fair solutions to rent disputes Speaking to reporters at his office, Mejren said the move would have a positive impact on the market as it would help curb property flipping (buying and selling properties in quick succession to make profits) and protect the market. Under the new rule, the registration fee will be split two per cent each between the buyer and seller, he said. Justifying the fee hike, Mejren said around 110 countries in the world are charging higher property registration fees than Dubai. In the UK, the fee is 4-10 per cent, France eight per cent and India 7.3 per cent. Ruling out any negative impact of the fee hike on the market as some analysts feared, Mejren said it would, on the other hand, help stabilise the property market that has achieved maturity. On concerns expressed by the International Monetary Fund (IMF) about the danger of another property bubble under way in Dubai, the Land Department chief said there are no indications of such an overheating in the market. Clearing the air on all your questions In a report, the IMF warned in July that Dubai authorities might need to intervene in the emirate’s property market to prevent excessive price rises. “Dubai has emerged as global city with a strong economic growth record. The city’s property market is mature and based on real demand. The market is stable and is very active. We believe that prices in Dubai are not higher than other top cities around the world,” said Mejren. He said the IMF warning came in line with Land Department’s findings. “We believe that increasing the fees will limit speculation and protect the market from a bubble. We decided to increase these fees before they even recommended it.” Mejren said the department took almost three months to finalise new fee structure after consultations with all stakeholders. Dubai has recorded 18.3 per cent surge in luxury home prices to rank among the top four in “Prime Global Cities Index” as prime property prices across the world fell by 0.4 per cent in the first quarter 2013. Prime residential prices in Dubai, which started to rise in early 2012, a movement partly instigated by regional troubles, recorded a double-digit surge in 2013, with the price of luxury villas increasing by 11.4 per cent and that of prime apartments by 15.1 per cent in value, Knight Frank, a leading independent global property consultancy said in a research note. According to ratings agency Fitch Ratings, the prime property sector in Dubai is poised for a strong 2014 following a vibrant 2013. -issacjohn@khaleejtimes.com Taylor Scott International
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