UAE Central Bank Hints at Dubai Real Estate Markets Likely Overheating-Land Department Denies Likelihood
Posted on 10th June 2014
On Sunday the UAE Central Bank came out with a warning that the real estate markets in Dubai were possibly overheating, stating in its financial stability report that, "Current average rental yields in Dubai and Abu Dhabi are approximately 70 and 130 basis points below historical averages, which could indicate growing imbalances - overheating real estate market. "
Two days later, the Land Department of the Emirate of Dubai in a bit to assuage investor concerns has stated that the growth in real estate in the economy is purely on the basis of improvements in the fundamentals and not speculative in nature.
The Dubai Land Development Director General released a statement stating that"Growth in demand from investors is a result of an improvement in fundamental economic factors, rather than down to speculation," He assured the investors that strict measures had been taken to curb speculation such as doubling the fee on property transactions to 4 percent that in itself had curbed the speculators.
The International Monetary Fund (IMF) had already issued a warning last month that Dubai might require stronger measures and tools such as imposing higher fees and taxes to check speculation in real estate markets. House pries in Dubai, that had taken a battering in the property market crash of 2008, recovered strongly to top global rankings in the first quarter of this year for the fourth consecutive quarter, increasing by a staggering 27.7 percent over the previous year, according to a report by Knight Frank property consultancy. Simultaneously, rentals also surged by an average of 30 percent and in certain popular residential areas of the Emirate, even doubled or hit record highs.Back to all Construction News
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