IMF No Longer Concerned
The International Monetary Fund (IMF) has announced that it is no longer concerned about a property price bubble in Dubai.
According to Masood Ahmed, head of the IMF’s Middle East and Central Asia Department, price growth on the emirate has moderated considerably.
He said that Dubai authorities had taken steps to limit speculative buying and along with mortgage curbs the market is now much less likely to see a spike in real estate values.
However, he said there were still areas that needed to be watched, and that real estate projects needed to be sequenced and carefully managed to avoid encouraging excessive risk taking by government related enterprises.
The IMF had previously warned that rapid rises in Dubai real estate prices, which earlier this year were in some cases a third higher than they were 12 months previously, could lead to another bubble and then a crash in the UAE emirate.
A report by property consultants JLL last month found residential rents and sales prices rose 2% and 1% respectively in the third quarter compared to the previous quarter, slower than the 3% and 6% recorded in the second quarter of the year.
Between June and August 2014, prices in some of Dubai’s most popular areas fell by almost 4% according to a Mashreq Bank report.
Jumeirah Park saw prices fall by 3.5% the largest of the declines, while Greens saw a decline of 3.1%, the Springs and Meadows dropped 3.4%, Arabian Ranches 3.3%, Jumeirah Village 2.6% and JLT 0.9%. Dubai Marina saw the smallest drop with prices declining just 0.2%.
Meanwhile, Jumeirah Beach Residence (JBR) prices continued to rise. Between June and August, prices rose by 3.2%, bringing the overall annual increase to 15.2%.
Mohamed Alabbar, chairman of Dubai’s biggest real estate developer Emaar Properties, said he welcomed the slowdown in the emirate’s property market and vowed to keep supplying new homes to help hold prices at ‘a reasonable level’.
‘In 2013, things went crazy because supply was limited. For me as a long term developer, this spike scares me, so I’m glad people are saying the market is cooling down. I think that is healthy,’ he said at the launch of the first phase of a new high end residential development called Dubai Creek Harbour, a joint project between Emaar and Dubai Holding, the personal investment vehicle of Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum.