On the Property Scene Post New Law

Dubai Marina towers under construction, 17-Mar-2006.

One comment that needs to be made is that the new law has yet to be detailed--that is, the detail has yet to be published. The Gulf News article quoted in an earlier post reported,

Bylaws will be issued to determine locations of freeholds as well as registration and transfer fees, which are currently 2% of the property value.

Furthermore~

The Land Department will issue booklets and guidance for property registration soon.

This leaves those involved in the property market still a bit in the lurch. Nevertheless, the issuance of the new law as purported encourages some amount of additional activity.

From London to Riyadh: Dubai promotion draws popular response is the first of two recent articles which describe movement in the property market. It highlights the efforts of DTCM (Dubai Department of Tourism and Commerce Marketing ) to promote the city by "drawing global attention to its iconic projects." AME Info puts a positive spin on numbers that are not particularly noteworthy, highlighting an event "that was attended by more than 200 people." Higher numbers than these are required to suggest that the property market is making significant inroads overseas. That being said, these virtual ambassadors for Dubai are making concerted efforts to spread the word on Dubai's vast development projects.

Where will the $36 billion in IPO refunds go? takes a closer look at prospects for the property market post new law and more importantly following dramatic events on regional stock markets which has seen a virtual crash in profits. This suggests that monies will have to be invested elsewhere, with no more visible alternative than the regional property market.

In typical AME Info fashion the writer predicts a significant upturn in property values. It reports that by mid-April $36 billion dollars will have been taken out of the local stock market, available for reinvestment elsewhere. I'm afraid the economics behind such an assertion are lost on me, but the suggestion is clear--there will soon be a lot more money on hand to chase the property market.

The reasoning goes that this will substantially up property prices as there simply are not enough existing units of freehold property available (for sale) in the market to satisfy the impending demand.

...if they (former shareholders) all decide to buy, then the capital return on Dubai property is going to look very attractive too. For the boom in stocks will then pass to real estate... There are a lot of question marks in this article, which could yet prove the undoing of this argument. But the fundamental conditions for a price spike in Dubai property now exist with too much money in pursuit of too few available properties.

The writer of the article, while admitting the possibiltiy of being wrong, asserts that the market forces at play could hardly be clearer. The day of the property investor may once again become a reality in Dubai.

For a look at the property law as reported earlier in the local media see New Property Law Enacted!

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