Dubai: Effective October 6, freehold property registrations in Dubai will be 4 per cent instead of 2 per cent as the authorities step up efforts to ensure the realty market does not overheat. These will be shared equally by the buyer and seller. (The change will not apply to warehouses or industrial properties.)
In the latest data with the Dubai Land Department, transaction values exceeded Dh160 billion in the year to date from 44,000 deals compared with Dh90 billion for the same period last year. It was Dh145 billion for the whole of 2012.
“The registration fee hike will slow down speculative moves on quick profit taking, which is never a healthy thing in a property market,” said Sultan Butti Bin Mejren of Dubai Land Department. “Last Thursday alone we had registrations of Dh1.2 million and that has never happened in the Department’s 50-year history.
“The decision to hike the registration charges has been in the works for some time and pre-empts warnings expressed by the IMF over the build-up of another property bubble. But Dubai’s property market has attained far more maturity and the buying and selling has been taking place on actual projects.”
The official added that even with the hike, property transaction fees here are still lower than in most of the mature Western markets as well as those elsewhere in the region, which averages 6.9 per cent.
“The hike proposal was discussed with multiple stakeholders and including those in the property market and not something that was decided unilaterally by us,” said Al Mejren. “What we have to do is take all steps possible to increase its long-term viability,” said Al Mejren.
That the authorities were considering a hike in registration charges was getting traction in the marketplace for some weeks now. It could also partially explain the marked increase in registration volumes of recent days and weeks.
According to Mahendra Pratap, director at SPF Realty’ “Even with the hike the charges here are still on the lower side compared to other markets and beyond the initial reaction, investors will easily adjust to it. And what could happen is that between now and when the hike gets enforced from October 6, local property values could have seen an upward adjustment by the same margin. The market’s momentum is such.”
Meanwhile, Al Mejren added that the Dubai Land Department will prioritise steps to ensure growth rates are sustainable and that other key fundamentals of the property marketplace, such as the rental index, will be under close scrutiny.