Tuesday, June 17, 2014

New fee, regulations & restrictions to curb off-plan property sales

Dubai is planning to introduce new fee and restrictions to curb sale of off-plan properties, the International Monetary Fund (IMF) revealed.

As per the latest IMF report, Dubai will be imposing additional fee and restrictions on resale of off-plan properties, as that would further discourage speculative demand.

The report said that the increase in real estate registration fee from 2 to 4 percent last October, and introduction of regulatory measures to ensure orderly market conditions for new real estate development, has been a welcome step.

When looking at the past international experiences, often countries that faced property booms repeatedly raised real estate fee and differentiated them with criteria such as buyer’s residency, use of property for occupancy or investment, or time elapsed before resale, etc.

The measures that the Dubai Land Department (DLD) plans to adopt is not yet known, sources in the market say that the move will be to introduce slab-wise registration fee.

The plan is to introduce new fees/measures on a sliding scale, and that is what the market requires in case of speculative activity, said Craig Plumb, Head of Research, JLL, MENA.

Property prices are going up, mostly driven by speculators in off-plan projects. More regulations may be required to discourage speculators, he said.

The Chief Executive Officer of PropSquare Real Estate, Parvees Gafur said that the new fee would be good for the market in the long-term, but the market is no longer driven by speculators, and mostly involves the end-users.

Moreover, many major UAE developers like Emaar, Aldar and Nakheel are not allowing investors to sell a property unless they pay 40 to 60 percent of the property value.

The UAE Central Bank, early this month, said that low residential rental yields in Dubai and Abu Dhabi indicates the imbalances and overheating in the property sector, with both emirates showing current average rental yields of 70 and 130 basis points respectively below historical averages, which indicates imbalances and an overheating real estate market.

The UK-based research house, Global Property Guide, said that Dubai has topped the list of house price survey for the fifth consecutive quarter, with house prices rising 31.57 percent during the year to first quarter 2014 and 9.58 percent in first quarter alone.

1 comment:

Gridle Caparas said...

We shall work more as a group for our real estate business to ensure that everything will go as planned. Make sure that everything is concistently done with all the effort of our agent. Now, continue to push through our goals and keep doing good business for the benefit of our investment.

Real Estate Investment