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Dubai property bubble worries overstated

New rules from Dubai Land Department reducing speculation; new offer helping maintain beliefs down. Concerns of Dubai's real estate marketplace experiencing a bubble are "exaggerated", Goldman Sachs Group stated in a report on Friday.

"New rules in the Dubai Land Department are targeted at curbing speculation, while fresh supply is helping keep values down," the USbased investment bank mentioned.

Property costs are 36 % below their 2008 peak despite increasing by about a third from the low within the 2nd quarter of 2011, bank professionals added.

Standard Chartered stated in August that despite prices rising, Dubai's property market was not heading towards another crash and the marketplace was more sustainable, impacted by an improved economy rather than speculation.
Although the UKbased Knight Frank stated property costs and rents in Dubai have grown in the quickest pace on the planet, Jones Lang LaSalle reported last month thin the price of increase (cost and hire) will slow down over the subsequent 12 to 24 months.

The Dubai Land Department has recently taken action to decrease turning available in the marketplace by raising registration charges to four per cent from two per cent from October 6 with Director-General Sultan Butti bin Mejrin emphasising the move would not have any negative impact on the market.
7 reported developers must give a 20 per cent building guarantee and make 100 per cent land payment before establishing any new job.

"No project in Dubai is launched without a construction ensure," Real Estate Regulating Agency CEO Marwan bin Ghalita had informed this site.

After we raised the matter on how developers marketing off strategy might finish their job, he explained: "Those selling off plan have put a one-fifth guarantee as collateral and they're not being allowed to use money in the trust (escrow) account until 30 % of construction is reached."

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

Funds remained the king in Dubai's realty industry in the first-half. Almost 80 per cent of apartments were purchased by cash customers.

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

Earlier, Knight Frank said climbing expatriate public had resulted in "good" rental returns for investors with net produces between four and six %. For more information on the cloudy situation around Dubai real estate market click to find out more on property for sale in dubai (