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Dubai property prices could rise up to 40% - top official

Real estate property under construction is seen near the Dubai Marina, September 27, 2011. REUTERS/Jumana El Heloueh

Dubai's property prices are expected to climb up to 40% more than last year, a top official said, as the emirate implements strict new rules to curb speculation.

In an interview with Bloomberg,  Land Department General Director Sultan Bin Mejren said home prices may rise 35-40%, but the authority is planning on introducing new regulations later this year to limit the frequent buying and selling of off-plan projects, commonly known as 'flipping'.

“Transactions on off-plan properties are a little dangerous,” he told Bloomberg. “We are now studying them and looking at ways to ensure that they don’t hurt the market.”

He added the review would be completed by the first quarter and the real estate authority aims to implement the regulations by mid-year.

This is the latest in a series of regulations aiming to curb speculation that led to the fall of the market in 2008.

Last year, regulators doubled the transaction fee on new properties from 2 to 4% to limit the frequent buying and selling of properties. The Cental Bank also introduced a stricter mortgage cap, increasing the downpayment on properties made by UAE and foreign buyers.

RENT REGULATIONS

Bin Mejren also said the Land Department is planning regulations to limit rent hikes. Last month, Dubai announced a change in the rent-cap, limiting how much landlords could increase rents for existing tenants based on current market value.

However, currently there are no controls over increases for new tenants.

“We are studying laws for residential and commercial properties and each will have its own guidelines,” he said. “We expect to have them prepared in either June or the third quarter. There has to be some regulation for new contracts in order to have stable rental increases.”

Dubai updated its online rental index to aid tenants and landlords last week. The real estate body also established a centre dedicated to settling rent disputes.

Much of the renewed interest in the emirate's property market has been sparked by Dubai's Expo 2020 win last November.

Dubai aims to build a state-of-the-art complex to host the global event, which is expected to attract millions of visitors and create more than 250,000 jobs.

“Don’t look at buying property as though you’re buying shares on the stock market,” Bin Mejren said. “If you buy a property here, hold on to it, because by 2020 the city will be entirely different from what it’s today.”