Property flipping is back in the UAE’s real estate markets - but this time there's a concerted move to suppress it.
When the property market crashed in Dubai in 2008, speculative flippers were said to be a major reason why prices slumped by 65%. The problem has again reared its ugly head, but developers and the government are taking steps to deal with the situation.
Aldar Properties, Abu Dhabi’s largest publicly-listed developer, recently prohibited investors from reselling their units before they have paid 50% of the property’s price.
“We need to learn from the mistakes of the past… We need to be concerned about flipping,” said Mohammed Alabbar, chairman of Dubai’s largest developer Emaar Properties, speaking at the company's annual general meeting recently.
Investors must have paid 40% of the price before reselling an Emaar property. Emaar last year banned real estate agents from re-selling off-plan properties purchased under their name, until handover. The developer also keeps a computer database of investors. If any investor is found involved in violating the rules related to flipping, the erring investor is barred from making another purchase from the company.
Developers however say that many investors circumvent the regulations, finding people to purchase property on their behalf.
The Dubai Land Department increased property registration fees from 2% to 4% of the property value to control flipping.