Mohamed Alabbar also expects real estate business to increase dramatically on rising demand
Emaar Properties, Dubai's largest property developer, expects its real estate business to increase drastically, and its recurring income will also grow, chairman Mohamed Alabbar told reporters on Wednesday.
Alabbar also said market demand for homes in Dubai was very strong but "flipping", the practice of buying speculatively for quick resale, needed to be controlled.
Dubai's index fell for a second session this week as heavyweight Emaar Properties weighed after reporting a dip in first-quarter profit.
Emaar retreated 1.8 percent. The property developer posted an 8 percent slide in Q1 profit on Tuesday on higher selling and marketing costs.
Revenue increased 16 percent however, and the outlook for the company remains optimistic, suggesting investors may want to book profits after the recent rally.
No FLIPPING DOES NOT NEED TO BE CONTROLLED it needs to be STOPPED.
You stop flipping by not allowing the property to be flipped TWICE in the offplan sales contract. The contract should state that the property can only be sold on completion of the project or upon the buyer having paid at least 40% of the purchase price to the developer. This will stop speculators from standing in a que or getting their staff to do so to buy these properties leaving room for genuine buyers who are looking for a home.
Someone buys a house in Dubai then sells it 2 months later, makes a profit-this is considered bad, termed "flipping".
Someone in Dubai buys stocks in the stock market then sells it one week later, makes a profit-this is considered good, because it is termed "profit" but is it not "flipping"?
I agree with you Glen. but it will never stopped. Half of the fillers are internal staff of these companies or work as agents for external "investors" so as Valerie puts it, house/stock is a commodity open for buy sell on short notice. unfrortunately its all about money not building home/society. Hint- Point to me as single community centre open for public
Valerie, I suppose the main difference is that not everyone needs to invest in the stock market, but everyone needs a place to live. The buying and selling of shares really only affects those involved, however the result of flipping is to drive up prices for everyone to the point where property becomes unaffordable, either to buy or to rent.
I am constantly amazed at how little Dubai has learned from the previous property crash.
it is totally within Emaar's control as to whether the property they sell is flipped or not. the contract could stuipulate all sorts of conditions which would restrict flipping - but they actually do not believe that this is in their best interestes as they need the speculators to drive their market forward. Their sales structure and methods are based on the fear of missing out rather than making an informed choice - i must buy this unit without seeing the contrat or having any comfot on delivery time or quality because if i dont there is a queue beind me wanting to. Without these conditions of fear, the sales would be slower and they would not make the money they need to make to service their debt and build their buildings.
Flipping will not go away. If developers insist on 40% construction progress before giving NOC, flippers will move on to a POA arrangement. Execute an irrevocable POA in buyers favor, make payments on sellerâ€™s behalf until 40% construction is complete then transfer property in buyers name. This will indeed set off a dangerous precedent as the courts / law will not disallow POA process although it is likely to be misused by fraudsters. Single seller can sell the same property to multiple unsuspecting buyers who wonâ€™t understand risks in a POA. Even if the developers start identifying / blacklisting habitual flippers, they will buy properties in name of family, friends or even employees/servants. Flippers donâ€™t restrict themselves to a single developer. Flipping is market making or price discovery tool for the developers. They will not stop it. Period. Apologies for not being able to suggest a solution.
I would suggest to get your act together and get Emaar management team to concentrate on improving there performance over medium and long term stedy growth rather than the bonanza show they exercise with every new launch