On March 15, the Dubai government announced that it will allow locals to develop commercial and industrial land gifted to them by the nation’s ruler, Sheik Mohammed bin Rashid Maktoum, in exchange for a fee of 50 percent of the land’s assessed value.
Previously, these lands had been tightly controlled by the government, and their uses were closely monitored and restricted. Now, however, in light of the “estimated 50 percent drop in the value of property in Dubai over the past two years,” (as reported by The Wall Street Journal) the government is taking a new approach: encouraging small businesses.
The government of Dubai hopes that the fees paid (about 25 percent of the estimated value of the properties less than two years ago) will help Dubai raise billions in additional revenue. At the same time, these properties will now be part of personally developed and managed projects handled by the owners of the property, which the government hopes will lead to more development because the investors will be more likely to develop projects that they directly own.
I think this is an interesting idea. After all, the idea of paying some sort of fee for permission and then being permitted to just “do deals” and get them done sounds very appealing. Maybe we should institute a form of this program here: for example, instead of having to season a home, you can flip it right away if you pay a small percentage of the purchase price for skipping the “seasoning” process. Of course, this assumes that seasoning is a reasonable request and requirement, which I’m not inclined to think it is, but imagine the possibilities in terms of liberating real estate investors and paying down our massive national debts…
At the very least, it’s interesting to think about. Sadly, I expect that’s all that it will ever come to. This program is way too “proactive” for our current governing body to be interested and I imagine that the regulations that would come with it could end up stifling real estate investors even further. Furthermore, it seems unlikely that real estate investors would welcome the idea of paying for something that we should be allowed to do anyway. It’s just an interesting notion to think about, and I welcome your thoughts in the comment area below.
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