As a real estate consultant, I get asked about the potential for a correction in Dubai's real estate market. and whether it is the right time to invest or whether to wait.
My experience with property market cycles has taught me that predicting peaks and bottoms is nearly impossible. The key is to position oneself within the asset class, especially in a market as dynamic as Dubai's, which continually sets new records in terms of transaction volumes and price per square foot.
Historically, Dubai's market has seen corrections of about 15-20 percent, distinct from an outright downturn like in 2009. For instance, if the average price is currently Dh1,350 per square foot, a typical correction might reduce it to around Dh1,080. However, if prices peak at Dh1,800 and then undergo a 20 per cent correction, the resultant price would be Dh1,440, still higher than the previous peak.
This shows that perfect market timing is an elusive goal.
Warren Buffett's approach emphasizes long-term investment strategies and strengthening positions during market corrections. This sentiment is shared by Michael Saylor, the Bitcoin guzzler, known for his diverse long-term investments across various sectors. He highlights the value of maintaining one's position over time, even with volatile assets like Bitcoin, maintaining that any time is a good time to enter the market.
Looking back at stock prices of the likes of Amazon and Apple, dwelling over buying the stock at $54 or $69 (28 per cent difference) seems trivial now, as the asset will outperform these peaks and valleys in the long run.
Widen the outlook
Ray Dalio's investment principles suggest adopting a macro-outlook, comparing Dubai's average price of Dh1,350 to that of other major cities and their property markets. This perspective confirms that Dubai's real estate, in terms of price per square foot, remains relatively inexpensive.
If we assume that Dubai will eventually catch up to these cities, any price point could see a significant increase in value. Therefore, trying to time the market seems futile. Instead, the focus should shift towards recognizing the value of long-term investment strategies in Dubai's real estate sector.
Any time is a good time to invest, but trying to time the bottom of the market often results in more missed opportunities than achieving great entry price points. If you believe in the asset class, you should always maintain a position for it to perform well, regardless of the bumpy road.
When in doubt, zoom out, because in the long term, Dubai's real estate will likely outperform the gaps between peaks and bottoms.