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Tue 16 Apr 2013 10:57 AM

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UAE property flipping 'will never stop' – Tasweek boss

Reports suggest buyers at latest Emaar project selling properties at 30 percent mark-up

UAE property flipping 'will never stop' – Tasweek boss
Tasweek CEO Masood Al Awar.

Speculation in the UAE’s property market “will never stop”, according to one real estate boss in the Gulf state.

Speculation, which involves the practice known as ‘flipping’, sees buyers purchase a property before quickly selling it on to another party at a marked up price. Speculation was seen as one of the main reasons for Dubai’s property bubble bursting in 2008-2009, causing prices to slump by as much as 65 percent.

At the launch of a new Emaar project over the weekend, some reported that buyers were selling apartments at a 30 percent mark-up only minutes after purchasing them, leading to fears that property flipping has returned to the market.

“I’ve learnt from my earlier experience in real estate that speculation will never stop because the greed of people from making money will always be there,” said Masood Al Awar, a former Emaar executive and current CEO of UAE property developer Tasweek. “But sometimes speculation maybe good for the market - if it is organised.”

A report from Jones Lang LaSalle earlier this week showed apartment prices in the emirate rose by 18 percent in the first quarter of this year, with prices now approaching their 2008 peak, but Al Awar believes that developers have learnt from mistakes made in the previous boom.

“The number of units being released is relatively lower [compared] to what it used to be before, and it’s not all at the same time, so they are taking precautions. Even Nakheel said they will not allow sale and leaseback to stop speculation,” he added.

Al Awar said he was looking to discourage flipping in his own latest development, an AED500m villa project in the UAE capital Abu Dhabi, by trying to convince buyers that there was more value in holding onto their properties long-term.

“We go very deep inside getting the end user and making sure that they will make more money in the longer run than selling it in the beginning,” he said. “People will make more money if they stay then if they sell their property within two days.”

Randal Velochy 6 years ago

It is not a miracle that Dubai is witnessing such temporary boom in economy and increase in property sale value, thanks to the Arab Spring where thugs of toppled old regimes flocked into the UAE pouring $Billions of stolen money into Dubai economy in particular. In fact, Arab Spring economic impact on Dubai surpassed that of the fall of the Soviet Union in the 90's.

ametis 6 years ago

Flipping may never stop because a greedy person is eternal, but I wonder how many people are still crazy enough to buy something that does not exist....except on paper ... Go ahead be stupid throw your money out of the window

jonjon 6 years ago

there is something that can be done, as it has been done in other cities around the world. when the contract is signed there should a clause that states they're only aloud to sell the property after five years and that they can only purchase one property at a time, at a project. that way you can build communities and etc, and everyone has a chance for affordable homes. the problem is the companies themselves perfer they practise to continue because for the man who missed out and is unwilling to purchase the inflated price of the home. he'll be on the lookout and be first in line to purchase in the next project. if you look at condos here at night half of them of a building have lights turned off because their investment properties which isn't a bad thing but because of these investers prices are way too high and sizes of condos are way too small. so that leaves first time buyers, recent grads for example, continueing renting.

Hisham 6 years ago

I think everyone is just waiting for a second, or perhaps even third bubble to burst before implementing a law that doesn't allow buyers to sell before a certain amount of time has passed. I would say to anyone who's planning to buy to just hold off and let these "fast guys in fast cars" do their damage first, then buy at up to 65% less when the bubble bursts in three years or so. You'll lose some money on rent in the meanwhile, but when prices drop significantly you'll be happy!

Samara Pope 6 years ago

There's the developers, the speculators and then there is the average person. The first two make money at the expense of the last, the average person. Either because the average person bought worthless 'properties' from them or couldnt buy at all because the price of an average home was pushed beyond the average person's reach by the game of toss where the goal kept moving higher.

It's the global socio-economic reality of our time. The rich in every country are getting richer while the middle class is declining because a basic fundemantal human need, housing is first outpriced by speculation and then stripped of any value by the bubble popping, deflation setting in and credit drying up.

Today it's property, in 50 years it will be water, in 150 years it will be just plain clean air to breath which will be a commodity in short supply, affordable only to the super rich who will milk the world for the right to breath.

Glen 6 years ago

Flipping will never stop, while the project developers allow it and even make it contracturally possible when they include the right to resell from an off plan project.
Though the contract requires a set minimum of say 40% having been paid to the developer before a sale and transfer can take place, developers have a loop hole in the contract that allows this to happen twice when the original buyer signs power of attorney to a new buyer who then in turn does the same to a third buyer.
It should be more than apparent that off plan is designed for property speculators to FLIP AND FLIP AND FLIP until THE BUBBLE BURSTS AGAIN.

dickbart 6 years ago

i live in Abu Dhabi. my building owner maintenance refuse to repair the cracked glasses of the windows. what should i do?

kingkaiser 6 years ago

Here is an easy way to curtail flipping. Stop giving "VIPs" preference for mid range houses! Who expects the guy coming out of a rolls royce to be the end buyer for a 2000 sqf villa? Its pretty clear that sales to this group are purely for the purpose of resale, yet this is the group that will get first preference.

The only thing undersupplied in this market is logic.

SAM 6 years ago

Why should flipping be curtailed? It is a market just like any other; no one is forced into buying realestate. As long as increases in rents are controlled by RERA, it is a harmless practice bound by the rules of supply and demand. Many people are born gamblers and since we do not have casinos here, why not gamble with realestate? It's their choice.

Max 6 years ago

I had this on 20th floor of an Emaar building - had to pay to repair it myself.