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Not a day goes by when we aren’t speculating yet another Dubai property bubble. But what is the basis of these conjectures and claims? Where does this heightened level of fear and frenzy come from? Do we base our thinking on our understanding of Dubai’s property market today as against the one that went bust in 2008; the emirate’s present property values in the global market context; the upside potential for property values given the mid-term vision for the city; or the city’s demand and supply reality?
By any measure, the property market in Dubai is significantly more robust than it was before the crash in 2008. Fundamentally, the Dubai-specific factors that caused the previous crisis are strikingly absent in today’s market. Despite this fact check, some may still claim that property prices in Dubai have recovered too quickly on the back of the crash. I strongly disagree: Properties were actually underpriced from the end of 2009 until the third quarter of 2010.
More a product of panic selling, many properties were sold below original cost. In areas such as Business Bay, Jumeirah Lakes Towers and Dubai Marina, properties in some instances were sold for as little as Dh550 per sq ft in 2009-2010.
Yes, since then prices have doubled and tripled, but not because of a speculative bubble. Rather, investors began to realise that in times when one can buy property for Dh550-Dh600 per sq ft, given the actual cost (land and cost of construction) was Dh1,100-Dh 1,500 per sq ft, one is presented with an unprecedented investment opportunity.
Looking to the future
Investing in Dubai now also makes sense because of the megaprojects that are currently being built and will be completed over the next five to six years. These include the Al Maktoum International Airport at Dubai World Central, Jebel Ali Theme Park, the Business Bay Canal, Jumeirah (Citywalk), Dubai Creek Harbour, The Lagoons, Dubailand, Dubai Hills, and Mohammad Bin Rashid City. Following this construction boom, which mirrors Dubai’s developmental milestones, the emirate will attain global status as a mature cosmopolitan city.
This brings us to the often raised point of concern: oversupply. Dubai has consistently proven its long-term ability to attract new residents and foreign investment in large volumes by offering unmatched infrastructure and world-class living standards. Where does the question of oversupply arise when we struggle to find parking spaces in malls, battle increasing traffic on the roads, or struggle to find enrolment in schools and reservations in restaurants? It’s because Dubai’s popularity has resulted in a swell in the population and the government and developers are building a future today that can cope with the demands of tomorrow.
So if you are still wondering if it is the right time to buy property in Dubai, the answer is an emphatic yes. Now is the time to invest in Dubai. A note of caution: it is important when investing in property to select the right developer, the right area and the right layout. Ensure that a development is being constructed by a reputable contractor. Also, you need to choose projects that are in line with all rules and regulations, and ones that can be delivered on time.
It is common sense. That said, today offers the opportunity to look beyond the negative hype and to view property market in Dubai for what it really is: a chance to be part of one of the world’s most remarkable success stories of our times.
Source: Firas Almsaddi, Executive Chairman of fäm Properties
Al Nisr Publishing accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided.