Department plans to introduce new rules to control speculation and stop market from overheating
Dubai property prices could rise by as much as 40 percent this year, according to the head of the emirate’s Land Department.
Sultan Bin Mejren said in an interview with Bloomberg that the department planned to introduce new rules to control speculation on properties sold before they were built in response to property prices increasing more than 30 percent in 2013.
He said the real estate authority planned to complete a review of off-plan transactions in the first quarter and may introduce new regulations in the second or third quarter, Bloomberg reported.
Bin Mejren also said home prices this year may rise 35 percent to 40 percent.
“Transactions on off-plan properties are a little dangerous,” he said. “We are now studying them and looking at ways to ensure that they don’t hurt the market.”
Bin Mejren said the Land Department was also planning regulations to limit rent increases when tenants change.
While caps exit on increases for existing occupiers, Dubai currently had no controls on increases for new tenants.
“We are studying laws for residential and commercial properties and each will have its own guidelines,” Bin Mejren told Bloomberg.
“We expect to have them prepared in either June or the third quarter. There has to be some regulation for new contracts in order to have stable rental increases.”
The Land Department last week said it was updating its rental price index, which determined caps on increases depending on the type and location of the property.
Last year the department raised the transaction fee to 4 percent from 2 percent and the UAE Central Bank imposed restrictions on the value of mortgages made available to foreign buyers in a bid to cool the market.
Bin Mejren said in relation to Expo 2020: “Don’t look at buying property as though you’re buying shares on the stock market,”. “If you buy a property here, hold on to it, because by 2020 the city will be entirely different from what it’s today.”