Thursday, August 28, 2008

Dubai issues new regulation to check speculation in the market

Dubai has passed on a new regulation to regulate the sale of real estate that are under construction so has to put an end to speculation which has been the cause behind the skyrocketing property prices in the emirate.

As per the law issued this week, sale of off-plan properties in Dubai need to be registered with the department prior to which, they cannot be resold, said Marwan bin Ghalita, Chief Executive, Dubai Real Estate Regulatory Authority (RERA).

The Standard Chartered Bank, last month, has warned that the property sector in Dubai showed signs of overheating, as speculators who have been betting on quick returns inflate prices of units that are still under construction.

Speaking about the new law, Bin Ghalita expressed his confidence that it would help curb speculation. In Dubai, laws are being introduced step by step. Further, everything is transparent as it is with the Land Department.

The property prices in Dubai have surged 79 percent since 2007, said the Morgan Stanley report, earlier this month.

Demand for properties in Dubai, the home to tallest tower in the world and three man-made islands have been increasing ever-since the government permitted foreigners to invest in properties.

The off-plan law follows the mortgage law which was passed last week, aimed to regulate the booming property sector of Dubai.

It will also prevent master and sub-developers from charging transfer fee on off-plan sales, Bin Ghalita added.

The Developers, however, can be paid with an administration fee of Dh.1000 to Dh.3000 for every transaction, once it has been approved by the Land Department.

The property prices in Dubai is likely to increase by 35 percent this year, and by another 8.5 percent in 2009, and then Dubai takes measures to weed out short-term speculators.

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