The Dubai property market has consistently been attractive to investors and one aspect of this is the ability to flip property. This concept simply means buying property and selling it very quickly for a profit. This practise could soon become history with developers and the government seeking ways to stop investors flipping.
Marwan bin Ghalita, chief executive of the Dubai Real Estate Regulatory Authority is reported to be considering controlling the re-sale of newly built property to help calm speculation. Two of Dubai largest developers Emaar Properties and Nakheel have implemented rules that make investors hold on to their properties for at least one year before sale.
While many investors have made fast cash from the rise in prices, there is also mounting concern over the levels of uncontrolled speculation.
“Real estate investment should be long term, not short term,” Ghalita said.
“Real estate isn’t like the stock market. Only in Dubai you see people flipping apartments to make fast money and this isn’t helping the market,” he said.
The practice can give short term gains for individuals but in the long term may harm the Dubai property market.
The Dubai property boom is unique as the majority of properties bought in the Emirate are from investors own money. Mortgage finance for property in Dubai is very smal, speculators say that for this reason alone Dubai housing market will remain buoyant despite the credit crunch.
Dubai property prices have risen substantially over the last few years. Morgan Stanley recently announced that prices have risen 79% since 2007. The volume of properties sold in Dubai this year is expected to reach a record high according to Jones Land LaSalle (JLL). JLL forecasts that the number of property sales in Dubai will appreciate to 55.2%, to AED 717bn (£100bn) by the end of 2008, up from AED 462bn (£64.3bn) a year ago.
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