Dubai property bubble worries exaggerated

New rules from Dubai Land Department curbing speculation; new offer helping maintain ideals down.

"New laws from the Dubai Land Department are directed at minimizing speculation, while new provide is helping keep beliefs down," the US-based investment bank said.

Property costs are 36 % below their 2008 peak even after rising by about a third from the low within the next quarter of 2011, lender experts added.

Standard Chartered said in August that despite costs soaring, Dubai's property market was not proceeding towards yet another crash and also the industry was more sustainable, affected by an improved economy as opposed to speculation. Although the UK based Knight Frank mentioned property costs and rents in Dubai have increased in the fastest speed on earth, Jones Lang LaSalle noted last month thin the rate of growth (cost and hire) will decrease over the following 12 to 24 weeks.

The Dubai Land Department has taken steps to discourage flipping on the marketplace by increasing registration charges to four per cent from two per cent from Oct 6 with Director-General Sultan Butti bin Mejrin emphasising the transfer wouldn't have some negative impact on the market. 7 noted developers need to give a 20 per cent construction assure and make 100 per cent land payment before establishing any new job.

"No project in Dubai is started without a building ensure," Real Estate Regulatory Agency CEO Marwan bin Ghalita had advised this site.

When we raised the problem on how developers selling off plan would complete their job, he explained: "Those selling off plan have already put a 20 percent guarantee as collateral and they truly are not being permitted to use funds in the trust (escrow) accounts until 30 percent of construction is reached."

The UAE Central Bank's new mortgage legislation is expected to be revealed before yearend, which Goldman Sachs experts believe can help cool the market.

Cash remained the king in Dubai's realty industry in the first-half. Almost 80 % of apartments were bought by cash purchasers.

Politics balance and high rental yields continue to drive Dubai attractiveness to investors.

Rental yields, the lender mentioned, are between 5 and 6 per cent when compared with world-wide range being between 2 and three per cent.

Earlier, Knight Frank said climbing expatriate population had led to "great" rental returns for traders with net yields between four and six per cent. For more information on the cloudy situation around Dubai real estate market click to find out more on buy property in dubai