Britons investing in Dubai real estate sector might lose millions of pounds due to falling house prices and new rules on unbuilt properties.
A group of 800 British investors who bought property ‘off-plan’ are at risk of losing their money as work has slowed on building sites after a collapse in Dubai’s housing market in the wake of the global financial crisis, the Daily Telegraph reported on Friday.
Investors bought the unbuilt properties for a cheaper price in the hope of selling them for a quick profit. However, property prices in Dubai have fallen by more than 40 percent since September, leaving building sites unfinished.
Morgan Stanley has estimated that projects worth $262 billion have been delayed or canceled across the UAE.
According to a recent report by the Egypt-based investment bank EFG Hermes, the weak demand is going to continue to push down real estate prices until late 2011, Britain’s Homes Overseas magazine reported earlier in May.
The Dubai Real Estate Regulatory Authority has revised rules on repaying money for property bought off-plan which mean investors cannot get their full investment back. Under the RERA rules, investors are refunded depending on how much of the building has been built.
Nigel Knight, a spokesman for the investors’ group, said its members had bought property valued at around 1 billion pounds ($1.58 billion), of which almost a fifth had already been paid over, the Telegraph said.
