The real estate sector of Dubai kicked off 2014 with the same flair and boom that we saw in 2013, but the flow was arrested somewhat when the government of the emirate decided to intervene to ward off any possibility of a bubble.
The government was not wrong to be concerned or to act pre-emptively given that the prices had already risen to a level that suggested an unrealistic heat-up of the real estate sector. It seemed that the dusty old canvas of the past – buried out of sight by the legendary comeback of the Dubai property sector – was nevertheless fresh in the minds of the emirate’s rulers.
Where everyone was expecting the market to gain further, courtesy of the extravagant claims of real estate developers and agents, UAE-based property portal Bayut.com foresaw stability in the market in 2014 in its market report at the start of the year. The government, acting wisely, issued strategic laws that sought to keep the market stable in order to solidify the gains it had made since the infamous crash of 2008-2009.
Though Dubai chose a tortoise path to success, it did nothing to arrest rising investor interest. In fact, the stable prices seemed more digestible for investors, who continued to pour money into the prominent locations of Dubai.
Speaking of prominent locations in the emirate, Dubai Marina was far and away the most favoured location, and investors from all over the world converged to get an apartment in this coveted neighbourhood. Downtown Dubai saw the second-highest investor activity in the region as the high-end development of Emaar Properties successfully delivered everything it had promised.
Interestingly, in the current year, Dubailand has overtaken the erstwhile third-best performing location of Dubai, the Jumeirah Lake Towers. This may be because of its proximity to the Expo 2020 site or the interesting development projects it has showcased for the future, but Dubailand received a high level of interest from investors. Jumeirah Lake Towers, with its usual knack for attracting salaried individuals seeking a better future while living within their means, was meanwhile relegated to fourth place for the first three months of 2014.
The first quarter of 2014 was a good one for landlords as well, as it allowed them to raise rents following an influx of interest from competent job-seekers moving to Dubai in their quest for a better life. The Arab Spring had a fair share in increasing the population of the emirate last year, and quite recently, Damac Properties was seen publiciszng the safe haven status of Dubai to investors in Africa (a good sales pitch by all accounts).
The stability and the backing of the property market by an adequate rise in population are working for Dubai, at least for now. The most interesting observation this year was that the International Monetary Fund (IMF) actually publicised the property market of Dubai as stable – the same market it had warned against another property bubble last year. But where the IMF said Dubai’s property was stable, a government institution stated that it might be heating up. This was perhaps the strangest news this year as a government institution has never issued such warnings.
Many property experts believe that the property market of Dubai will continue on its way to prosperity, and there will be no crash or correction until 2020. That’s when Dubai will be hosting Expo 2020. If the government of Dubai remains as true as a straight arrow in its aims of boosting tourism to Dubai to 20 million visitors per year by 2020, all investments seem to be completely safe in the emirate and the real estate agents are right as rain in their claims about the future of Dubai real estate.
A lot is riding on the real estate market of Dubai making it. The emirate is running out of oil, and another grave crash is just not something Dubai can afford this time around.