Dubai Property Market: A Lesson Well Learnt

In recent months the Dubai property market has taken a buffeting. Hit by a credit crisis and the ripple effect of a global financial meltdown, the Dubai property market proved that it was as susceptible as the rest of the world to the twin bogeys of recession and crash. In spite of being a cash rich Emirate member, in spite of having the bulwarks of petrodollars and tourism to sustain the desert country, Dubai took quite a beating in the global financial arena. But is that all there is to the picture? Or is there another side to the coin?

On closer perusal one sees that there is more to the picture. Real estate prices in Dubai's property market had been hugely inflated. People were putting money in property not as end users, but as investors. This scenario of constant transaction led to the steady rise in property values. This little desert principality became synonymous with opulent and lavish construction projects, some of which defied practicality and were clearly meant for the super rich. It was a market flush with funds. Unfortunately most of the money was notional wealth. When the bubble burst, the world stood aghast as the seemingly impervious Dubai financial and real estate market went into a tailspin. Property prices plummeted and investors scrambled to off load their investments. But then one realizes that maybe such a correction was necessary. A realignment of property prices was needed, to be in tandem with actual property demand and supply. It was no longer feasible to build mind bogglingly expensive villas on the beachfront for a select few. With jobs in the emirates dwindling and visa laws not being particularly amenable to the expatriates, it made more sense to build tower blocks with apartments that would actually be occupied by individuals rather than lavish construction projects that would never reach completion. The big brash projects, the super luxurious offshore islands have begun giving way to more practical apartments and condominiums.

This correction was much required. Although the short term fallout is difficult to weather, it is a fact that this correction will lead to long term sustainability in the Dubai property market. It was beginning to seem unrealistic in Dubai with property prices sometimes escalating as much as 15-20% in a single day. Now the scenario is more realistic. Only when a market is built on tangible and sustainable foundations, will the market be able to achieve long term goals and objectives. The overblown property market has learnt its lesson. The new catchwords are sustainability, affordability and long term. The Dubai property market has weathered the storm and is now inching its way back to survival. The process is slow but by no means impossible and given the tenacity of this little desert country, it's only a matter of time before Dubai once again becomes a much coveted real estate destination.

About the author

Robert Martin is associated with a renowned real estate agency Rockyrealestate.com in Dubai. He is excelled in fostering Dubai property deals to the benefit of city dwellers in and around Dubai Property Market.