A second report explores the supply and demand imbalance

Most tellingly the new report suggests that only 4,000 new units actually hit the market in 2006. This resulted in further pressure on rents and house prices.

But if Shuaa Capital and Colliers International are right then the impact of new supply on the Dubai real estate market in 2007 will be sharper than that suggested by EFH Hermes. The latter argued that supply delays would push back a serious oversupply into 2008.

But the delivery of the Jumeirah Beach Residence - now scheduled from March to June this year and comprising 6,500 units - has always been seen as a testing moment for Dubai real estate. This is a very large volume of apartments of a particular type in a particular location, and the danger of flooding the market has always been appreciated.

Supply to stay high

However, this supply side problem is not about to go away anytime soon in Dubai. Shuaa Capital and Colliers International suggest that even in 2009 there will be some 77,000 high-income units completed while demand is estimated at 36,000.

It is very hard to put too much credence on such forecasts as even estimates for 2007 supply vary from 30,000 units from Tamweel to 71,800 in this new report. And this difference could well be the difference between a market with a shortage of supply and over supply.

All the same, these reports on supply and demand should be taken as a clear warning to would-be buyers. The outlook for prices is negative for some years ahead, and buying on an optimistic view of the immediate future is foolish in this light.

Replacing rents

What can make sense for certain individual buyers is the replacement of high rental payments with a well structured mortgage deal, with a contingency plan to keep a property for longer than expected if capital values fall significantly and take time to recover.

Unfortunately, many market participants look rather like the bullish people who bought Arabian shares in 2005 and regretted it in 2006. Sadly in the investment world 100 per cent gains one year are more likely to mean a big loss in the next and not a further huge gain.

EFG Hermes suggests that there may well be a fall out among developers as the market deteriorates - with some projects cancelled or put on hold - and clearly this makes future forecasts even more difficult to hazard.

So in the immediate future blind faith in property investment may well be replaced by something far more cautionary.