Saturday, October 04, 2008

Decline in property prices unlikely; Dubai may see correction in profit

Property prices in Dubai are unlikely to decline by 2010, as against predicted in the recent reports, but, there will be a correction in profits, revealed the top officials at Dubai Land Department (DLD).

Although several reports and analysts are predicting a dim future for Dubai's property sector, optimists are still of the opinion that it is just the beginning of success for Dubai.

According to CEO of RERA(Real Estate Regulatory Authority), Marwan Bin Ghalita, there will be correction in few places, but only in profit. Instead of making a profit of 20 percent, may be, several investors will make a profit of 5 percent, but they are not losing anything.

A 10 percent decline in Dubai property prices is likely towards 2010, said a recent Morgan Stanley report.

Even the investment Bank, EFG Hermes, in their report mentioned that a 20 percent decline in property prices is likely towards 2011.

However, the Director General of DLD, Sultan Bin Butti Bin Mejrin, said that despite such reports Dubai's property sector continues to remain robust.

He pointed out that similar reports had cropped up in 2007, but Dubai continued to remain a strong market, much against predictions. The DLD is still registering Dh.200bn worth transactions, and the market continues to remain healthy.

Agreeing with DLD, even Abid Junaid, Executive Director of ETA Star Properties, said that a drop in property prices is unlikely in the near future. The popularity of Dubai with investors is mainly due to the lifestyle offered, its ideal positioning in the Middle East and its tax-free structure. None of these has changed.

The DLD has so far registered 5,099 plots in Dubai, with investors of various nationalities, including UAE nationals. Indians continue to be the largest number of home owners. Economists at Standard Chartered, suggests introduction of a 50 percent capital gains tax to eradicate speculators.

The DLD last week had last week announced that a rental index, meant for new entrants to Dubai, would be announced post Eid Al Fitr. The index will work together with the new rent cap. However, it is yet to be known if the new cap will be more or less than the current five percent, but, it is believed to include a different 'mechanism'.

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