Dubai authorities announce pre-emptive strike on property

Dubai authorities announce pre-emptive strike on property

Dubai authorities announce pre-emptive strike on property

In a move which some see as negative for the Dubai property market in the short term, the Dubai authorities have announced an increase in the registration fee charged on real estate transactions from 2% up to 4%. This doubling of the registration fee has obviously caught the attention of many property investors across Dubai but the authorities certainly have their reasons for increasing this payment.

Whether or not you agree with this doubling of the registration fee, to combat the threat of those looking to flip properties for profit in a relatively short space of time, it does show the authorities in Dubai being proactive rather than reactive.

Will this affect Dubai property?

The very fact that property stocks in Dubai were relatively unchanged after the announcement from the authorities perfectly illustrates the fact that on balance it is probably positive. While investors obviously want to make a profit on their property investments, in as short a space of time as possible, the long-term benefits of a more secure and less volatile market are there for all to see.

Quote from : “If you take a look at the basic figures, property values increased by 31% in first half of 2013, rents by 11.3% over the same period and many properties are nearly 40% higher in value than the lows of 2009, it does look as though the Dubai property market is moving into dangerous territory.”

Despite the fact that for some time after the 2010 crash, which saw property values in Dubai fall by up to 50%, the market was seen as risky, this opinion has changed of late. Indeed apartment prices in Dubai are up by an incredible 20% since the start of 2013 and there were concerns that a housing price bubble was beginning to form.

Overseas investment

As we have seen in niche property markets such as that in London, it is the ongoing influx of foreign investment which is pushing prices in Dubai higher and higher. The economy is performing better than the likes of Europe and North America, the authorities seem to have a handle on financial policies and this safe and sure approach in relation to the long-term structure of the property market has actually gone down well with some people.

It is unlikely we will see a significant fall in overseas investment across Dubai but perhaps those looking to flip properties for a quick 10% profit might have to think again and perhaps lengthen their investment timespans. We should see over the next six months or so whether this move has taken the froth out of the market, and indeed some speculators have faded into the background, or whether indeed it continues to go from strength to strength.

Putting down a marker for the future

While the doubling of the registration fee for real estate transactions, excluding warehouse and industrial property, is itself an interesting move, it shows that the authorities are not frightened to make decisions in the future. It is perhaps the consensus that the authorities are more proactive today than ever which will stay longest in the minds of property investors, while others will look back to 2010 and wonder why they did not do it then?

Whether or not you agree with the move to increase registration fees, there is no doubt that the authorities have put down a marker for the future.

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