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29 March 2024

Major UAE developers team up against flippers

A model of the Abu Dhabi masterplan at display in Cityscape. (Pic: Parag Deulgaonkar)

Published
By Parag Deulgaonkar

Aldar Properties, Abu Dhabi’s largest publicly-listed developer, is moving to curb flipping of properties in its projects.

Investors are not being allowed to resell their units until 50 per cent of the purchase price has been paid, a senior company official told Emirates 24|7.

“Purchasers are only allowed to transact the property after 50 per cent has been paid,” said Gurjit Singh, Chief Development Officer, Aldar Properties.

“Speculation in the real estate market will always be there and it can never be eliminated.

“Speculative activity can be managed. We don’t have any system to track speculators, but we do monitor our database of investors,” he added.

With the introduction of the new measures, the company joins an elite group of UAE developers who are trying to combat flipping – an activity that was rampant during pre-2008 the property boom.

Emaar Properties, Dubai’s largest developer, does not allow investors to sell properties in the secondary market until they have paid 40 per cent of the purchase price.

In 2013, the developer barred local real estate agents (registered/unregistered) from selling any off-plan property, purchased under their names, until handover.

Emaar Chairman Mohamed Alabbar has said the company is doing all it can to control flipping of properties in the market.

“We are trying to control flipping. We have a mainframe [computer] system that is incredible - if you buy and you flip within 30 days, the system will never allow you to come and buy with us again.

“But people are very smart - they bring in their friends the next time and it goes on and on. These guys buy an apartment and sell it after two weeks - so you have to watch it,” he told a conference in Dubai last year.

Nakheel, the master developer of Palm Jumeirah, takes post-dated cheques to prevent flipping.

In October 2013, Dubai Land Department increased property registration fee from 2 per cent to 4 per cent of the property value to control flipping.

The UAE Central Bank issued new mortgage lending rule, restricting loans of 80 per cent of the property value to Emiratis and 75 per cent to expatriates for the first purchase – a move intended to cool down the country’s real estate market.

Last week, JLL, a global consultancy, said average residential asking prices within investment areas rose by nine per cent to reach Dh14,000 per square metre in the first quarter 2014 from Dh12,800 per square metre in Q4 2013.

Asking prices have increased for both apartments and villas, to Dh16,400 per square metre and Dh12,100 per square metre, respectively.

Sale prices increased by 27 per cent over the year to Q1 2014, the consultancy said.