Aldar clamps down on property 'flipping'

TAKING ACTION: Aldar is clamping down on property speculators. (Getty Images)

Abu Dhabi's largest real estate company is to become the latest developer to clamp down on the practice of "flipping" by placing restrictions on the resale of its properties.

Aldar Properties CEO Ronald Barrott said in comments published on Tuesday that the developer will impose new rules on resales in its next phase of its properties coming online in October and November.

Barrott said these rules governing resale of its properties will become standard for all future projects.

"A degree of speculation can be good, but it needs to be tempered... You can’t let the market get out of control, otherwise you have what is going on in Dubai," Barrott told UAE daily The National.

"That is not a criticism, but there is overheating there. What you want is a market that moves quickly, but is sustainable.”

Barrott would not reveal what measures Aldar plans to impose to dampen speculation other than that they will be "quite a new way of dealing with this issue”.

The announcement follows a similar move by Dubai-owned developer Nakheel, which said earlier this month that it was taking action to stop speculation on its Trump International Hotel & Tower, already the second most expensive in Dubai behind the Burj Dubai.

The developer said investors in the Trump tower have to sign a purchase sale agreement banning them from on-selling the property for one year, adding that the clause could be extended to other projects in the future.

The practice of "flipping", where investors buy property and then quickly sell it on at a higher price, has been blamed in part for the soaring price of real estate in the UAE.

House prices in Abu Dhabi rocketed by 61 percent between the fourth quarter of 2007 and the second quarter of this year, while in Dubai prices jumped 37 percent over the same period, HSBC said in a report in July.

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