As the first quarter closed, it was clear the investment landscape in Dubai (and that of the world) has changed. Returns from most asset classes have been flat to negative as the world adjusts to the paradigm of lower oil prices and a stronger dollar.

As the “New Normal” takes hold, the return expectations have been calibrated lower with market participants focusing increasingly on cash flow yields. In the real estate spectrum, developers have increasingly started catering to mid-income segment (Nshama being the most visible and recent player in the field).

As prices continue to soften at the top end, developers and investors alike have started to hunker down, waiting for the demand curve of the equation to reassert itself, even as supply continues to increase. This manifested itself in the form of softening rents in the last quarter and will continue as new supply enters the market. Given this scenario, investors are well advised to heed the following basics:

* The real estate cycle is as much about upkeep as it is about location. Given the recent scrutiny on home owners associations, it is apparent this variable will play an increasing role in the resale prospects of a property. Transparency of the general and the sinking funds will be paramount, and where there are misallocations and/or underfunded reserves, property values will quickly suffer.

This is all the more critical in an era where the city continues to move towards an owner-occupied market. Given the historical lack of adequate insight into this, it is more than likely this variable will move to the forefront in investor decision-making, and spawn new avenues of activity, as underfunded reserve buildings are snapped up at below market prices by investors looking to refurbish and thereby capturing the upside potential.

* Mortgage transactions as a percentage of the overall continue to rise at a steady pace, especially in the villa space, indicating end-user demand remains high even as speculative activity has receded. This implies demand for communities where substantial new supply is not being added will remain firm, and as prices stabilise, will be the first to move higher.

* In an era of a strong dollar, foreign investment flows will continue to slow. After the influx of hot money during 2011-14, and with the outlook of asset returns throughout the world turning bearish, the temptation to keep investments in cash will be high.

However, given the high yields being offered, combined with depreciating currencies in the subcontinent — the source of primary buyers for Dubai real estate — it is inevitable that investment flows will increase far quicker than the markets are anticipating.

* The theme in the real estate market remains mid-income. Developers have adjusted their product offering, but in this space, given the price sensitivity, it is likely that off-plan prices may well nudge lower. A combination of higher quality offerings at reasonable prices and with bank tie-ups will ultimately lead to demand being high.

Investors will be well devised to seek out such developers who have either had experience in carving out this space and/or have put into place a rigorous execution mechanism for such products to be offered.

With the demise of the flipping model, and a preponderance of supply in off-plan, it is of no surprise that investors are drawing parallels to the 2008 boom-bust scenario. However, it is equally apt to remember that those who invested in the 2009-10 period benefited the most in the subsequent price upturn.

The cycle of 2002-08 and the rebound of 2011-14 was a macro cycle where all segments of the market appreciated. The cycle that we are undergoing presently is a more nuanced one, where individual quantitative and qualitative factors are dominating, and different income stratas of the market are experiencing different dynamics.

This is a sign of a more mature market, and even as macro variables will continue to play a role, investors would be advised to heed these principles as a microstructural mechanism to navigate the real estate investment landscape ahead.

The writer is the Managing Director of Global Capital Partners.