IMF director warns Dubai not to be ‘overtaken by property market exuberance’
House prices have risen by more than 20 per cent in the past year.
November 12, 2013 3:01 by kippreport
The International Monetary Fund (IMF) has warned Dubai that its property market should be driven by fundamental factors, not speculation, and the city should be prepared to act if it observes rapid increases in asset prices.
“When you begin to see very rapid increases in asset prices, then you just need to be prepared to act,” says Masood Ahmed, IMF’s director for the Mena region. “The government of Dubai is already beginning to act.”
Ahmed uses the example of Singapore, where buyers need to pay a one-time tax of 15 per cent if they resell the property within six months, as a measure that could be implemented in Dubai.
“Going forward, just make sure that fundamentals continue to drive it, do not let yourself be overtaken by a degree of exuberance.”
House prices in the emirate have jumped by more than 20 per cent in the past year, prompting the IMF to warn, in July, of the risks of another bubble forming after the crash of Dubai’s inflated property market in 2008-2010 nearly caused state-linked companies to default.
In September this year, Dubai announced that it would double the registration fee charged on property transactions to four per cent to prevent excessive speculation in the market.
The emirate’s land department chief told Reuters last month that the city would strictly enforce existing rules and, if necessary, set new ones to prevent another property bubble. The UAE Central Bank imposed limits on mortgage loans last month and its governor said repeatedly that he was not worried about a new house price bubble.