Dubai Unlikely To Introduce Fees On Off Plan Sales – Expert

The Dubai government is unlikely to introduce more measures to regulate the emirate’s off-plan property market if sales prices cool down, a property expert has said.

“If we continue to see off-plan sales rising, then I believe the government will step in to introduce regulations against off-plan market sales. If the market self corrects then the government probably might not do that. But I think they are monitoring the situation closely,” said Nick Maclean, managing director, CBRE, Middle East.

He added that some amount of speculation is necessary to drive the property market forward but stressed that there needs to be a healthy level of end-users in the market.

“That overall balance between speculators and occupiers is not perhaps correct. So the government is very closely monitoring the balance between those two kinds of buyers. But I don’t see the need for the government to introduce more legislation to monitor the property market. They would leave that to the developers and will only step in only if something drastic happens,” said Maclean.

Maclean’s comments follow a report from the International Monetary Fund earlier this year, which predicted that Dubai might charge off-plan sales to reign in the rapid price growth and avoid a bubble.

Speaking on the sidelines of Cityscape, the real estate expert however suggested that officials could extend the current transaction charge of four per cent of the property’s price to off-plan sales as well.

“If we see that come into the market then it will be an easy way to influence it and stop the off-plan sales.”

Developers have launched a number of projects this year in order to cash in on the optimism existing in Dubai’s real estate market after it recovered strongly in 2013. Many have even reported their units being sold out within a day or a few hours.

According to the latest report from CBRE, average sales prices increased by around three per cent quarter-on-quarter in Q3, bringing the annual growth close to 23 per cent. Meanwhile, the growth in residential rents dipped by a marginal one per cent in the third quarter of this year.

Property experts have estimated that Dubai’s real estate market is cooling down after recording strong growth in the last two years. Existing government regulations, a large supply pipeline and an increasing mismatch between buyer and seller expectations have caused prices to level off, analysts say.