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.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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