This resulted in a situation where acquisitions were frequently ‘flipped’, or sold on for a quick profit, further inflating the market.
Over the next six years, many millions of dollars of investment were poured into the city-state, creating ambitious projects such as record-breaking skyscrapers and floating, man-made islands as well as a swathe of lush, green suburbs. Within just a few years what had once been an ordinary fishing village was transformed into a global hub.
Until the world financial crisis of 2007 occurred, it seemed that nothing could stop this rapid urban development, but in 2008 Dubai’s construction industry ground to a virtual halt. It subsequently limped along until confidence finally began to return in 2013.
This has been a challenging time for Dubai real estate but following recent changes to property regulations, the market is now able to operate within a much more secure framework. Speculators have been discouraged by the doubling of transaction tax, and investors can now claim compensation if a project fails to complete on time.
These changes have led to a rebalancing of the market and, with the property ‘flippers’ now pushed to one side, a more mature set of buyers are currently making an appearance on the Dubai property scene.
Mohamed Alabbar, Chairman of Emaar and one of the city’s most wealthy and influential developers, claims that recent adjustments to the market have made Dubai “much more affordable”. A number of developments coming onto the market in spring 2015 have been specifically aimed at end users rather than property developers, offering opportunities for individuals and families who could previously only afford to rent.
But the current renaissance of Dubai real estate is not just focused on the lower end of the market. A number of massive, high-end projects originally planned or launched before the 2008 crash are now getting back on track: demonstrating that ultra-rich property owners and investors have maintained a strong interest in the area.
The political instability in many parts of the Middle East has encouraged wealthy professionals to move to Dubai as it is considered a safe, prosperous place to live and work. Mohamed Alabbar believes that Dubai could eventually become another New York or London by matching these global cities’ amenities and business facilities, but at a lower cost and in a more convenient location.