Some major developers in the UAE are moving to prevent speculators from reselling off-plan properties before completion – a process known as flipping.
The latest to limit the practice is Aldar Properties, Dubai’s largest publicly-listed developer, whose Chief Development Officer Gurjit Singh told Emirates 247 that buyers would only be allowed to sell after they had paid 50%.
They join Dubai’s biggest developer Emaar Properties who impose a 40% minimum investment before flipping, and in 2013 barred local agents from selling their off-plan property at all until handover. “We are trying to control flipping,” said Emaar Chairman Mohamed Alabbar, “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 he pointed out that it is hard to entirely stamp the process out, as people, for example, buy in friends’ and relatives’ names.
Other attempts to stop flipping include developers accepting post-dated cheques, the Land Department doubling registration fees to 4%, and the Central Bank raising minimum loan-to-value rates. But with prices rising by 27% in the year to Q1 2014, the temptation to flip remains.
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