Dubai’s Property Sector Goes Back To The Future?

Since the start of this year, Dubai has seen over a dozen property project launches including several developments from Emaar and Damac.

Most of the buildings sold out immediately after their respective launches, the developers proudly reported. In fact, Emaar’s sale of 188 townhouses in Mira, part of the Reem mega-development, even led to a mini stampede, needing the attention of Dubai Police on a Saturday.

There is no doubt a reason to rejoice the fact that the emirate’s real estate market has managed to push itself up from a property slump that saw prices drop almost 60 per cent five years ago.

But it’s also hard to deny the uncanny resemblance that today’s scenario has to pre-crisis days in Dubai.

For starters, all the projects are off-plan, and are slated for completion in the next two to four years. So, who are these investors who are hustling and shoving crowds to buy these new units? No doubt some of them are end-users looking for a safe haven in the Middle East, but there is also the likelihood of speculators and flippers returning to the market.

“An initial glance might suggest that many of the conditions that led to the unsustainable growth in real estate prices in dubai in 2006 and 2007 have returned,” Alan Robertson, CEO of consultancy Jones Lang Lasalle MENA said in a recent report, echoing the sentiment.

“However, there are important differences as the Dubai market has matured. The excesses of the last speculative boom will hopefully be replaced by a period of slower but more sustained growth in demand and prices.

“The challenge is to ensure that this confidence does not lead to undue exuberance. If the market has learnt anything from the past decade, it is that an extended period of sustained growth is far more beneficial than a short period of unsustainable growth followed by an inevitable crash,” he added.

Has Dubai learned its lesson? Only time will tell.