Is the Dubai property market maturing?

We will likely look back at the Dubai property market in years to come as an example of how markets can appear from nowhere, rise to unprecedented highs, collapse on the back of a worldwide economic downturn and then return to favour. This is not your stereotypical real estate market but figures released this week seem to suggest that while many still consider Dubai to be an emerging real estate market, is it perhaps moving onto the next stage?

Before we look at the recent data it is worth noting that while there is still economic uncertainty around the world, especially across Europe, the Dubai property market is performing admirably. Despite repeated concerns of a forthcoming “collapse” this has yet to materialise and many now believe the move from an emerging market to a mature market has been completed.

Investment in Dubai

Figures from the Dubai Land Department (DLD) show that property investment across Dubai reached a staggering £22.4 billion over the last year. This comes at a time when prices have been a little “soft” although they are now starting to harden as long-term investors begin to descend upon the region. By far and away the most popular areas of Dubai are the Business Bay and Dubai Marina although it has to be said that significant investment is also spread across other parts of the region.

The figures from the DLD also detail the number of specific real estate related transactions which totalled 23,000 – with 41% relating to sales, 50.4% relating to mortgages and remaining operations making up the balance. In many ways it is this transparent data which is giving investors more confidence in the longer term together with recent regulatory changes which have gone some way to averting the enormous boom and bust phases of years gone by.

Confidence, confidence, confidence

In order for any real estate market to attract medium to long-term investors, as opposed to those looking for a short-term profit, there needs to be confidence in the region, confidence in the quality of property available and perhaps more importantly, confidence in the regulators. If you take these points in isolation it does look as though all of the boxes have been ticked which is perhaps one of the main reasons why there has been some support for the region.

The transition from a short-term speculative hotspot to a mature long-term real estate market with attractive rents and potential capital growth does take time. As history shows, there have been difficult times during this crossover period although in reality the Dubai authorities have perhaps handled the situation better than many give them credit for?

Conclusion

There is no doubt that the Dubai real estate market is a very different animal today compared to the one at the turn-of-the-century and in the immediate aftermath of the 2008 US mortgage crisis which decimated the worldwide economy. The move from a speculative short-term investment arena to a more mature investment market offering stable long-term rental income as well as potential capital growth has not gone unnoticed by long-term investors.

Could this be a major turning point for the Dubai real estate market?