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The International Monetary Fund (IMF) called Tuesday on Dubai to take ''stronger measures'' to avert another property sector overheating, after prices surged more than 20 per cent in during the last two years.
''There has been a rapid rise in housing costs in the UAE, particularly Dubai due to sharp turnaround in the real estate sector, which warrants careful monitoring for overheating,'' said Masood Ahmad, Director, Middle East and Central Asia Department of IMF.
The Government has already doubled the registration fees to 4 per cent to check speculation and flipping while the UAE Central Bank has tightened lending to property sector by implementing higher loans to value ratios (LTVs).
While both these measures have dampened the speculation in the property sector to a large extent, the huge amount of cash transactions have continued to lift the property valuations.
''These measures are good. I think it is time to consider stronger measures particularly in ways to discourage a quick turnaround,'' Ahmed said after presenting the IMF's regional economic outlook in Dubai on Tuesday.
He suggested increasing the transaction fees further substantially to prevent any kind of speculative activity, citing Singapore's 30-percent tax on sales made within a year of purchase as an example.
''I think it is time to consider some stronger measures to try dampening what could possibly be speculative transactions in real estate,'' he said.
The market remains ''mostly a cash market'' for the moment, he said, warning that if lending to the sector sees a big increase, tightening measures would be needed.
Source: Babu Das Augustine, Deputy Business Editor, gulfnews.com