Building for the long term – The future of the Dubai real estate market.

Last week saw more than 70,000 people descend on the Dubai International Conference Centre for the annual Cityscape Exhibition. A traditional focus of activity for people interested in investing in the Dubai real estate market, this year’s show promised to be far more interesting given the recent turmoil in the world’s financial markets.

Like so many Cityscape exhibitions before, the main news emanating from the show was on the new projects that were being announced by the developers. Again this year we saw the launch of many unique and genuinely innovative projects, many of which will shape the landscape of the emirate for many years to come.

From the developers Nakheel, we saw the launch of the Nakheel Harbour and Tower development. An inconic project, which as its centrepiece will include the Nakheel Tower, destined to be the world’s tallest tower at over one kilometre high. Nakheel were not on their own however in making the news. The Podium Commercial Tower launched its new office tower, which on one side will be the world’s largest screen, covering all 33 floors of the building. In Abu Dhabi, the new waterfront project at the Micheal Schumacher Tower went on display, with its range of luxury penthouses on the ground floor, allowing you to literally park your boat in your front room.

What most people really wanted to see however was the reaction from investors to the recent turmoil in the global financial markets, especially as for so many years people have literally considered the Dubai real estate market immune from outside market dynamics. Would investors still be spending, or would they be turning their backs on the Dubai property market choosing instead to consider emerging markets further afield?

The answer was to be seen in the numbers of people coming through the doors to the Cityscape exhibition, with over 70,000 people coming through the doors of the Dubai International Exhibition Centre over the course of the four days. Whilst the days of people pushing to place deposits on units may have passed, what is undoubted is that there is still a considerable level of interest in the market for property in Dubai, with people prepared to believe in what New Dubai has the undoubted potential to become.

The future direction of the Dubai property market was probably best summarised by His Royal Highness Sheikh Al Maktoum, who suggested that the market for property in Dubai will thrive, as the macro economic fundamentals are in place for future growth. We are seeing a change in the nature of the market, but these changes will prove to be beneficial for the long term growth of the market as a whole as they will be dictated by realistic expectations and a gradual harmonising of market demand and supply.

These fundamentals, such as the increasing numbers of tourists and companies seeking to relocate to the region are undoubtedly where the future of Dubai lies, as it strives to move away from its previous reliance on its finite reserves of natural resources. What we are in fact witnessing is the beginning of the second phase of Dubai’s growth. Today, Dubai is slowly moving away from the short-term model of expansive growth which has characterised its recent development, and is moving towards the model adopted by more mature real estate markets. This model is destined to be shaped by more realistic expectations, and a shift in supply to cater for the increasing mid-level demand.

What was noticeable at Cityscape was that the serious and more discerning investor was evident, and these are the individuals who seem set to shape the Dubai property market in years to come.

Mark Burns works for Property-Dubai.tv, a Dubai real estate consultancy specialising in property in Dubai and throughout the United Arab Emirates.