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REAL ESTATE BUBBLE WARNING

Dubai must take more steps to curb speculation: IMF

Dubai, May 6, 2014

Dubai should consider stronger measures to dampen what could be speculative real estate transactions in the emirate, a senior International Monetary Fund (IMF) official said on Tuesday, in the global body's latest warning of a potential property bubble.

Growth in the Gulf emirate, the region's trade and business hub, picked up strongly last year, buoyed by the prospect of government real estate projects worth tens of billions of dollars following a property market crash in 2008-2010.

Masood Ahmed, director of the IMF's Middle East and Central Asia department, said the Fund had welcomed moves taken by Dubai's government and central bank last autumn to cool what could become a "speculative increase" but said more was needed.

Dubai, one of seven United Arab Emirates, announced last September it would double a registration fee charged on real estate transactions to 4 percent to prevent excessive speculation.

"Our own view is that these measures are good ... but it's time to consider stronger measures," Ahmed said in a presentation on the regional economic outlook.

Dubai's economy is expected to grow by around 5 percent this year, a similar pace to 2013, the head of its statistics office said on Monday.

Dubai accounts for a quarter of the total output of the UAE's economy. Oil-powered Abu Dhabi is responsible for around 65 percent of the federation's output.

The UAE, one of the world's top oil exporters, has yet to release 2013 GDP data. Analysts polled by Reuters in January expected 4.3 percent growth in both 2013 and 2014.

Dubai's tourist numbers rose 10 percent to 11 million people in 2013 and new trade licences recorded an increase of 12 percent. Real estate transactions jumped 53 percent to above 236 billion dirhams ($64.3 billion).

Selling prices for residential property rose by about a third from a year ago in the first quarter of 2014, prompting an IMF warning of a possible real estate bubble.

The number of real estate transactions in Dubai surged 38 per cent to Dh61 billion ($16.6 billion) in the first quarter compared to Dh44 billion registered in the same period last year.

A total of 15,694 real estate transactions were recorded in the first quarter of 2014, an increase in activity of 11 per cent over the same period last year. -Reuters and TradeArabia News Service

 

 




Tags: Dubai | property | IMF |

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