Dubai Prime Home Price Growth Slows On State Cooling Measures

Dubai’s luxury home prices rose at their slowest pace in over a year in the final quarter of 2013, as steps by authorities to avert another property market bubble took effect, a report said on Monday.

Both prime apartment and villa prices grew 15 per cent year-on-year in the fourth quarter, after an average annual rate of 21 per cent in the preceding four quarters, property consultants Knight Frank said.

A number of “cooling” measures in the second half of the year were the reason for the deceleration, it added.

Dubai doubled the registration fee charged on real estate transactions to four per cent in October in an effort to prevent excessive speculation in its property market, which led to a real estate industry collapse in 2008-2009.

Also last year, the United Arab Emirates central bank introduced caps on banks’ mortgage lending to foreigners and locals buying property in the country.

However, prime home prices could still rise by 10-15 per cent this year, buoyed by limited new supply in 2014 and a boost in confidence after Dubai won the right to host the World Expo in 2020, the report added.

After crashing more than 50 per cent as the bubble burst, pushing Dubai close to a debt default, the emirate’s residential real estate prices began rebounding rapidly last year. The International Monetary Fund warned in July that authorities might need to intervene to prevent another bubble from forming.

The report said average prime apartment prices were still about a third below their peak.