Dubai Real Estate: In the Age of Maturing?

Over the past few years since the property bubble led by the collapse of the global economy, the real estate scene in Dubai has recovered gradually, and has seen quite a number of regulations stamped over to control and prevent any more bad experiences from years ago.

In effect, the increases in regulations have increased the amount of stability in the market. And right now, the skyrocketing growth of the real estate sector has eventually descended—attributed to what experts call a maturing market.

Typically there are many definitions of what may defined as a mature market, but a few key identifiers could be described as follows:

• A market is mature when prices have reached a state of normalcy.
• When movement in customers’ needs and desires do not appear to be evolving rapidly.
• Consolidation by leading competitors reducing competition.
• Market shares of leading competitors being solidified and changing gradually, if at all.
• Regulatory frameworks, legal protections and regulations aimed at protecting consumers and businesses are in place and implemented.
•  Steady regular profits and growth for the developers

Another indicator of maturation that is quite unique to the real estate market is the limited amount of land available for purchase and that the demand for this space is ever growing, as the populations increase and demands on a city grow.

Whether or not the market is emerging or maturing, it is usually seen as safe and profitable to invest in some classes of real estate. However, mature markets tend to be less risky; thus, mature markets attract the most investment, particularly from institutions who are seeking a relatively low risk investment with very favourable returns over the long term.

The United Arab Emirates has only recently been classed as an emerging market by the MSCI. This means it has a long way to go before it’s on par with more developed countries and cities. That’s why we asked Andrew Chambers, CEO of GGICO Properties and long time real estate veteran: “What would be the signs the market is maturing?”

1. Increased regulations aimed at reducing short-term speculation and flipping
2.  More Negotiations
3. Less Risky Financial Leverage
4.  Stabilizing Market Prices
5.  Brokerage Market
6.  Affordability
7.  Clearance From Bank Books of Toxic/Problem Stocks

Certainly, real estate in Dubai is very much recognized, not only in the region, but also in the worldwide scene. Right now, it is currently on the way to becoming a mature market, having survived turbulent times while still having that robust and very positive market position.