Adrian Camps: Dubai market will bounce back

The Dubai property market is in the process of maturing from a speculative market to an owner-occupier and investor one. Successive market surveys have identified a continuing decline in property prices, and experience shows intending investors are holding back from investing when faced with this sort of press coverage. The latest prediction is a ten per cent drop in values over two years, and therefore most investors are waiting for the bottom of the market before purchasing.

The truth is that no one knows where the bottom is, and the way world events are interlinked it is difficult to predict the future. In December 2010 no one would have predicted the events in Tunisia, Egypt, Libya, Morocco, Algeria, Bahrain and Lebanon, which were seen as the next property investment hubs. There is evidence that due to the lack of security, some of this proposed investment is now finding its way back into Dubai to enjoy the stability and low prices here. Our view is elements of the Dubai market will rebound quicker than anticipated, but the main drivers will be quality and location.

According to information filed by the Government of Dubai at the London Stock Exchange, around 307 property projects of the 980 registered in the emirate are set to be completed in due course.

As many as 495 registered projects have been cancelled, are being cancelled, or on which work has otherwise stopped, although the Real Estate Regulatory Agency (Rera) has not officially made any cancellation announcements. From the statistics above, it appears the supply of new properties, may be slower than anticipated by some. It is even possible to foresee a restricted supply of certain types of upmarket properties.

The only currently available beachfront projects are on the Palm Jumeriah or in Jumeriah Beach Residence. The Waterfront at Jebel Ali will not be available any time soon, so if a purchaser requires a beachfront property, there is already a limited supply. Meanwhile, investors who are not under pressure to sell will be less inclined to do so, particularly if they have to accept less than the original price, which appears to be a mental threshold and a restricted supply of property in some areas may help harden some of the prices and rentals.

Recent regulations oblige the formalisation of instructions to sell or rent property in Dubai, similar to the requirements of most other mature markets. Before listing a property, it is necessary to obtain the written agreement of the owner on the sale price or rent and agree the broker's status and commission structure.

Proof of ownership is required in the form of a title deed and owner's passport copy. It's often difficult to persuade owners to part with documentation as they're used to waiting for an offer before supplying the papers. However, without proper documentation professional firms will not list the property in accordance with Rera regulations. This type of regulation helps to restore confidence to the market.

It will be interesting to see if the turmoil in other Middle Eastern countries and the stability offered by Dubai coupled with a properly regulated local market will cause the real estate sector to bounce back quicker than anyone has anticipated. We think it will.

Adrian Camps is a chartered surveyor, arbitrator and property expert at Fine and Country