Dubai In Focus Real Estate

The Dubai real estate market has changed beyond recognition since the government first made the provision for foreigners to buy property in 2002

. In the early days, those doing the buying were generally insiders, knowing they were on to a good thing because somebody had told them so.

Even people who had lived in Dubai for many years, and watched it spring up from the desert, were cynical when faced with the possibility of a step onto the all-new local property ladder. serious property buying was here to stay. As developers launched project after project - their registration halls mobbed by eager investors - everybody started to sit up and listen, and Dubai's PR machine had a new focus. Fast forward to 2008 however, and cracks in the global economy began to show. Dubai remained relatively unaffected for approximately six months while some of the world's largest players started to falter. But by the end of the year, Dubai too showed signs of strain as industries such as property development, real estate and finance laid off hundreds of staff.

Now in 2009, it is harder to gain credit than it has been in recent years but amid all the doom and gloom, there is good news for buyers, especially those willing to invest for the long term. Some areas of Dubai have seen price falls of up to 50%, so for those with available funds, the coming months could be prime time to buy property.

Areas such as Downtown Burj Dubai and The Palm Jumeirah, which experienced hefty rises last year, have now fallen in price. Nervous investors are fleeing the market for fear they cannot make repayments and many are selling properties for less than they paid. According to figures released by Dubaibased Asteco Property Management in January 2009, prices in Downtown Burj Dubai decreased by 28%, while Dubai Marina rates had contracted 18%. "These projects were launched at significantly high price levels and in the last quarter [Q4 2008], we have seen correction in some secondary sale prices as investors and speculators are looking to resell at a lower rate depending on their liquidity needs," explains Andrew Chambers, Asteco's managing director.

This has brought about a shift from a seller's market to a buyer's market, according to Thomas Bunker, investment sales consultant for local real estate agency, Better Homes. And with price drops of between 30 and 50% across many areas of Dubai, the real estate market has stalled momentarily. "There are some transactions being done, but

significantly less than what we are used to," Bunker says. "This trend is due largely to the fact that most investors see prices falling and they feel they have nothing to lose and everything to gain if they wait a month or so. "The doom and gloom is coming from those who have purchased large inventories of properties, or smaller inventories at high prices. For these people, the sky is falling. However the significant price correction going on in the market is causing many others to enter the market and buy affordable homes where they couldn't before." Recent events have also prompted developers to postpone or cancel a number of projects and draw out deadlines for finishing projects currently under construction. Bunker sees this as a positive for the long-term future of Dubai's real estate market. "The postponing or scaling back of projects in the market will go a long way to restoring confidence in the Dubai property market.

Over the past couple of years we saw a large number of smaller developers enter the market, developers who probably didn't have their houses in order. "In the coming months, the market will be cleaned up and the Dubai property investor will have a host of quality properties to choose from. Banks will feel more condent in financing properties as they will have the confidence in the developers who are left standing. "The lack of new projects will also curtail product in the near future, which should cause property prices to climb once again, especially if the numbers of expatriates coming into Dubai continues." (03/2009)

by: Tony Smith.

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