While the US economy continues to take centre stage and the European economy is not too far behind, on the rails we have seen a significant improvement in Dubai property over the last few years which has gone largely unnoticed. This is an area of the world which experienced perhaps the largest boom and bust scenario in living history which saw property prices pushed to levels which were unsustainable in the decade up to 2008. The collapse was prompted by the US mortgage crisis and a major implosion of the Dubai property market left many people in serious financial trouble.
Just five years later and the talk today is that Dubai is on the verge of yet another property boom even though prices have increased significantly over the last couple of years.
One element which is perhaps forgotten when the Dubai property market is discussed is the fact that as a consequence of the 2008/9 downturn there are still thousands of empty apartments in the region. Indeed this comes at a time when developers are promising billions upon billions of dollars of new investment in property projects which have attracted the attention of “safe haven” investors looking for somewhere to park their money.
Quote from PropertyForum.com : “I want to buy a villa or town house in Dubai ( up to 2 mil DHs ) , where to buy in a good community? Arab ranches or JVC butter which area in AR OR JVC ?”
There have been a number of major property exhibitions in Dubai over the last few months many of which have attracted the attention of would-be property investors who openly admit they are desperate for a slice of the action but often have no idea where the properties themselves will be located. This in itself is a very disturbing development for the Dubai property market because blind panic seems to have set in among some international investors which might indicate they are not investing on a valuation led basis.
Can the authorities intervene?
If there is one thing which has been learnt in the aftermath of the 2008/9 Dubai property crash it is that the authorities do have a major part to play in controlling the local market and local finances. The fact that only 20% of the local population is made up of native Emiratis is a phenomenon which will not be experienced in any other area of the world and illustrates the massive influence which overseas investors have in Dubai.
Even prior to the ongoing scramble for property investments the Dubai authorities have made it plainly clear that they will intervene to cool down the market and if necessary they will restrict access to finance. There are a number of ways in which this can be done and while perhaps not in tandem with the policy of a free market in the Western world it is perhaps a legacy of the recent property collapse.
It is alarming to see that some international investors are buying property in Dubai even when they are not 100% certain where the properties will be located. This perfectly reflects the ongoing boom in the region although hopefully the authorities will follow through with their threats to control the market and reduce the influence of overseas investors therefore avoiding the boom and bust scenario of years gone by. Time will tell!