IMF tells Dubai to slow down
International Monetary Fund concerned about another real estate bubble.
July 31, 2013 11:46 by kippreport
Dubai’s economy and property market are recovering so quickly that the International Monetary Fund (IMF) fears another bubble could form as a result.
Earlier this week, the IMF warned the emirate that it ‘might need to intervene’ to prevent another boom-and-bust cycle, reports Reuters.
Harald Finger, IMF mission chief to the UAE says that it is “too early to speak of a bubble”, but that action needs to be taken if prices continue to increase at their current pace.
According to Finger, property prices in the emirate have risen by 35 per cent from roughly a year ago. In 2009 and 2010, Dubai’s real estate prices crashed by more than 50 per cent, triggering a corporate debt crisis.
If property prices continue to surge, one suitable step might be introducing fees on the real estate market activity, Finger explained.
Since Dubai is a relatively tax-free environment, the officials told Finger that before being considered, the idea would need ‘careful coordination with the rest of the UAE’ to ensure that the emirate’s competitiveness is not damaged.