IMF happy with Dubai property price moderation

|By TAP Staff| International Monetary Fund  is pleased to note the moderation in the prices of  Dubai’s properties, a senior IMF official said.

The IMF has 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 emirate.

But Masood Ahmed, head of the IMF’s Middle East and Central Asia Department, told a news conference on Monday that risks seemed to have decreased, partly because Dubai authorities had taken steps to limit speculative buying.

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.

A report by property consultants JLL last month found residential rents and sales prices rose 2 percent and 1 percent respectively in the third quarter compared to the previous quarter, slower than 3 percent and 6 percent increases in the second quarter.

Similarly,  Emaar Properties chairman Mohammed Alabbar welcomed talk of a slowdown in the emirate’s property market and vowed to keep supplying new homes to help hold prices at “a reasonable level”.

“We will continue to supply the market – supply in the market is good for our customers because it keeps prices at a reasonable level,” Emaar chairman Mohamed Alabbar told reporters on Monday.

“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, ‘Oh, the market is cooling down.’ I think that is healthy.”

Alabbar was speaking at the launch of the first phase of a huge 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.

The entire project is slated eventually to cover nearly 1,500 acres and include two towers that the developer says will be the tallest twin towers in the world.

Earlier in the day a senior official of the International Monetary Fund said rises in Dubai property prices had moderated, and were now less of a concern to the IMF. Previously, the IMF had warned that rapid price rises could lead to another bubble and crash in the sector.

A September report by property consultants JLL found Dubai’s residential rents and sales prices rose 2 percent and 1 percent respectively in the third quarter of 2014 compared to the previous quarter. That was slower than 3 percent and 6 percent increases in the second quarter.