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Is it really true or just another gimmick to create a bubble to burst after a certain period of time? It's definitely true to a great extent that the Dubai Land Department (DLD) has taken several measures to curb speculation in the Dubai real estate market; but from where do such speculations arise?
Market trends, off-plan projects, major announcements affecting different industries, a change in economic policies, major events, etc., are among a few factors and materials used by some people to start, spread and fuel speculative tendencies in the industry. Thus, it's important for the government to not only look at going global but also making sure of the market's longevity.
As with great power comes even greater responsibility, the DLD has taken a few measures to ensure that there is longevity in this period of major growth. Among the few measures introduced to curb unnecessary speculation in the market are: Maintaining mortgage rates anywhere from 4% to 5% to encourage expats to invest; Recent increase in transfer fees on housing from 2% to 4%; Setting limits on the volume of mortgage finances and second home purchases; Increase in rentals with slabs for stable growth; Attracting foreign investors through foreign direct investments (FDIs); Organizing global events, introducing new regulations, etc., to ensure market transparency.
The above steps definitely affected end-users and investors, and effected a change in their buying habits. No longer do people go by the word speculation; they have learned to study the market well and try to get the maximum output at the minimum cost. There is no longer heedless buying. As most of the investors largely depend on mortgage financing for real estate investments, reducing the percentage on the loan-to-value ratio for both first and second home purchases for UAE nationals as well as expatriates, has been the most important measure among the aforementioned.
In time, it will be seen whether these steps have restrained current growth at the desired workable levels, but the undeniable impact they have can already be felt in the number of transactions in the residential market in Dubai.
• Speculators misuse industry data/news to start, fuel speculative tendencies
• Government institutions need to ensure the market's longevity and stability
• People have learned to study the market well as a result of industry measures
Source: Linford D'Souza, Special to Properties
The writer is Marketing & Rental Manager, Max Real Estate