Why the Bubble May Not Have Burst on Dubai Property Market

Dubai boasts everything from the recently opened world's tallest building, Burj Khalifa, at 828m high, to the priciest hotel in the world. It also has the only skating rink to be found anywhere in the desert, not to mention dozens of palatial buildings, villas and marina apartments.

If there was uncertainty in Dubai's property market before the recession, the downturn has definitely affected buying decisions even further. In the last year or two, property prices in the Emirate have plunged dramatically, in many cases by up to 50% since September 2008.

This has created enticing real-estate propositions in places like Palm Jumeriah, the man-made island where properties were previously out of the price range of first-time buyers. Many on middle to low incomes are taking advantage of the fresh levels of affordability.

With conflicting advice and rumours circulating about Dubai, the Emirate's debts and the current state of its property market, it can be hard to know who to believe. However, there are firm indications of a recovery on the cards for 2010. And with many agents agreeing that property prices will probably not fall any further, now could be the perfect time to buy in Dubai before they start to climb in earnest again.

Already some agents are reporting that prices are on the move in the Dubai property market for the first time since the downturn. The latest Dubai House Price Index shows prices increased by 7% in the third quarter of 2009, with the total volume of transactions rising by nearly 65%.

Other grounds for optimism include the planned openings in 2010 of a second Ritz Carlton, Tiger Woods' Al Ruwaya golf resort, the Palazzo Versace Resort, the five-star Royal Amwaj Resort and Spa, and the Conrad Hotel Dubai - all major projects. In addition, given the strength of Dubai's foreign currency reserves, the ability of this place to bounce back from recession should not be underestimated.

During the first half of 2009, visitor numbers were up 4% compared to the same months in 2008. Equally, the rapidly growing, overwhelmingly expatriate population means that people in Dubai will always need somewhere to live.

Developments in areas supported by first-class facilities and superb infrastructure, such as the Dubai Marina, are likely to do well. The marina remains one of the most desirable spots in Dubai's property market, and features high-quality residential developments such as The Point, where rental properties in particular should perform well.