The emirate of Dubai will raise the registration fee charged for real estate transactions in an effort to prevent excessive speculation in its property market, a top official said on Thursday.
The fee, charged to the buyer of a property, will increase to four per cent from two per cent on Oct. 6, Sultan Butti Bin Mejren, Director General of the government’s Land Department, told reporters. Warehouses and industrial property will be excluded from the increase.
“It will affect the quick selling of property. This will have a positive impact on the market as it will limit the flipping of property and protect the market,” he said. “Flipping” is buying and selling properties in quick succession to make speculative profits.
On the issue of whether the higher fee could hurt the property market, he said: “We don’t see a negative impact affecting the transactions.”
After crashing more than 50 per cent as a property bubble burst in 2009-2010, Dubai’s residential real estate prices are rising strongly again, partly because of an influx of foreign money; apartment prices are up about 20 per cent this year.
The International Monetary Fund warned in July that there was a danger of another bubble forming, and said Dubai might need to intervene in its property market to prevent excessive price rises.
Sultan Butti said real estate transactions in Dubai totalled Dhs162 billion ($44 billion) so far this year, up from Dhs90 billion in the same period a year earlier.
He said he did not believe there were signs of a new bubble developing.
“The real estate market here is mature and based on real demand for property. The market is stable and is very active. We believe that prices in Dubai are not higher than other top cities around the world.”
However, he said: “The IMF warning came in line with our findings and that is why we think that increasing the fees will limit speculation and protect from a bubble. We decided to increase these fees before they even recommended it.”
A government legal committee will next week start looking into disputes over some of the hundreds of real estate projects that were suspended in Dubai during its crash, Sultan Butti said.
Court fees will be waived for people seeking settlements with property developers, he added.