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Extravagance and Dubai truly walk hand in hand, and real estate in the emirate is surely no exception.
Strategically located at the crossroads of Asia, Europe and Africa, the United Arab Emirates became a global investment hub, boasting one of the world's best performing and fastest growing high-end luxury property markets on the planet.
The socio-political instability in the Middle East fueled a flight of capital to the GCC and to the UAE, making it an even more compelling destination for regional and international capital.
Faced with such promising outlooks and a solid real estate market growth, in Dubai specifically, one question remains on everyone's lips: Should I buy?
The memory of the financial meltdown of the property markets not so long ago, back in 2009, remains a catastrophic nightmare most investors think about before getting all too excited about the rising property prices in Dubai.
Although property prices skyrocketed 35% in 2013, the property owners' euphoria was matched by alarm and alertness at the World Bank and IMF for whom such rapid increases are a danger signal.
The Abu Dhabi and Dubai regulatory authorities took firm steps to avoid breeding an overvalued property market by imposing stricter rules on buyers and developers such as the increase in Dubai's real estate registration fee from 2% to 4%, which started in October 2013.
These preventive steps will fight speculation, and will stabilize prices and ensure sustainable growth in the real estate market.
These fresh regulations will not only affect property buyers and developers, but will also impact the banking system whose loan concentration and exposure to real estate have been curbed to safe levels.
The soaring property prices and the growth in real estate development projects in Dubai may raise concerns, but it is worth noting that these price increases are fueled by profitable long-term returns in light of a growing inflow of capital, increase in tourism projections and, last but not the least, the net positive impact the World Expo 2020 will have on the real estate market.
With a projected 25 million visitors annually to the Expo alone and the creation of 277,000 jobs as a result, there is ample motivation for new infrastructure and development projects across the board to support and consolidate the rising property prices.
Real estate developers are showing interest in the Expo venue and are planning several development projects around it, from residential to retail to commercial, to meet the needs of both the visitors and the participants.
Property booms in Dubai and Abu Dhabi should be welcomed and embraced as a sign of solid growth and a renewed interest in the emirates' real estate.
However, optimism should be kept in check and there should be constant monitoring of the price levels by both the private sector and the government.
We all have an interest in keeping the industry in check and making the most out of a healthy economy.
Having said that, the real estate market in Dubai is looking great, the growth is there to justify the rising prices and the risk of falling victim to a bubble are slim, thanks to the government's tightening regulations on the property market.
Confidence is as high as ever and investors are flocking back to Dubai, making the industry's outlook promising on all levels.
As a true investor, do not wait to buy real estate, buy real estate and wait.
Source: Paula Enander, Special to Freehold
The writer is a Partner of Stockholm Real Estate