Friday, August 29, 2008

New Dubai Registration Law To Curb Speculation

Source : The Business Times, August 28, 2008

Sales of unfinished properties must be registered before they can be resold

(DUBAI) Dubai has issued a new law to regulate the sale of real estate still under construction in an effort to curb speculation that has sent property prices in the Gulf Arab emirate skyrocketing, an official said on Tuesday.

Upside: Dubai property prices will probably jump 35 per cent this year and another 8.5 per cent in 2009, according to a poll

Under the law issued this week, sales of off-plan properties in Dubai must be registered with the department before they can be resold, Marwan bin Ghalita, chief executive of the Dubai Real Estate Regulatory Authority (RERA), said.

Standard Chartered Bank warned in July that Dubai's property market showed signs of overheating as speculators betting on quick gains inflate prices of units still under construction.

'It will help to curb speculation,' Mr Marwan said of the mew law. 'In Dubai we are introducing laws step by step . . . Now everything is going to be transparent because it is with the Land Department.'

Dubai property prices have surged 79 per cent since the beginning of 2007, Morgan Stanley said earlier in the month.

Demand for real estate in Dubai, home to the world's tallest tower and three man-made islands in the shape of palms, has surged since the government first allowed foreigners to invest in properties in 2002.

The government passed a freehold property law in 2006 granting foreigners the right to own properties at selected developments.

The off-plan law follows the issuance of a mortgage law last week as part of a drive to regulate the Gulf Arab business hub's booming real estate sector.

It will also prevent master and sub-developers from charging transfer fees on off-plan sales, Mr Marwan said. Developers however can be paid administration fees of 1,000-3,000 dirhams (S$386-1,157) for each transaction after approval by the Land Department, he said.

Property prices will probably jump 35 per cent this year and another 8.5 per cent in 2009, when they are expected to peak as Dubai takes measures to weed out short-term speculators, a Reuters poll showed on Tuesday.

The analysts said property prices would fall at least 15 per cent from peak to trough. -- Reuters

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