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Why The Dubai Property Boom Will Last This Time Around

Why The Dubai Property Boom Will Last This Time Around

Dubai’s real estate market has new buyers, better laws and a solid foundation, writes Haider Ali Khan, CEO of Bayut.com.

The Dubai real estate sector experienced robust, demand-driven growth in 2013-14. While this impressive growth has been cause for relief for some, it has elicited warnings from the International Monetary Fund (IMF), which believes the market could be headed towards another crisis.

Despite these concerns, I am optimistic and do not foresee a crisis owing to the fact that this time around, the boom of Dubai is more profound and has a solid foundation. The Dubai of 2014, by comparison to the Dubai of 2008, is a much more mature market that hardly has anything in common with the latter. Before we get into details of why I feel so optimistic about the market, we must first see what led to the crisis of 2008.

One of the many contributing factors that led to the crisis was the property law in Dubai, or lack thereof. The Real Estate Regulatory Authority (RERA), which was founded in July 2007, was still in its infancy when the crisis struck and was therefore not really equipped to avert, or even handle, a disaster of that magnitude.

Today, however, a lot has changed. The Dubai government, together with its various regulatory bodies including RERA, has gone the extra mile to bring about stability by controlling supply and nipping problems in the bud. Aggressive law-making and other timely steps have played a very important role in rebuilding investors’ confidence.

The doubling of transfer fees in Q4 of 2013, the Tanmia Initiative of 2011-12, and a number of other new rules played their part in keeping the market from becoming too overheated too quickly, and in lassoing the investor back into the market. The Tanmia Initiative in particular is a notable step since it led to the resumption of 300 stalled projects, which gave investors new hope.
‘Tanweer,’ which was dubbed the first investor protection law of its kind, was also a huge stride towards promoting transparency and protecting investors’ interest in Dubai. All of these small steps brought positivity to the market.

To cement further the general positive sentiment that had begun to seep deep into the market, the government announced an array of large-scale projects in Dubai while simultaneously devising new ways to target overseas buyers. In 2013, DAMAC began a series of roadshows in India and Pakistan. This, perhaps, was one of the many reasons why the total investment made by Indians and Pakistanis in Dubai doubled in 2013.

This multi-pronged strategy has worked well in bringing a new pool of first-time buyers into Dubai, creating more legitimate demand in the market. In contrast with the debt-fuelled market of 2008, these new buyers seem to have a preference for cash-buying. With a cash-based foundation, Dubai’s realty sector is a lot more stable today than it was in 2008.

All of these reasons point towards the fact that Dubai’s recovery is indeed deeply rooted. I believe that from this point onwards, even if Dubai’s boom sees ‘quieter’ periods, they will most likely be followed by more growth as the emirate gets ready for Expo 2020. With all the evidence we have, there is no denying the fact that this, right now, is yet another boom. It is here and I believe it is here to stay.

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