Best time in years to buy in Dubai?

London-based property adviser, Mohammed Kashani-Akhavan took a full-page advertisement in Gulf News to make his case for Dubai property now representing a great opportunity for buyers.

It was interesting to see this statement from an individual who claimed 27 years of experience in the UK, as a successful property investor who had always followed the old mantra of buying cheap when everybody else was selling.

Distressed sales only

That certainly appears to characterise the Dubai real estate market as the year draws to a close. There are a large number of properties on the market in all categories, and the only ones that are selling are negotiating distressed prices.

Kashani-Akhavan argued that the cancellation of many projects in Dubai would reduce the upcoming supply of property and ensure 'significant growth in the value of Dubai properties in the future', and that the rate of return on rental properties makes 'Dubai one of the best cities in the world for long-term property investment'.

But then the counter-argument is that many local companies are downsizing their staffing levels - not least the real estate and property development groups - and this is likely to change demand for property in the near term, possibly putting a cap on rental prices.

Then again, Kashani-Akhavan has it right when he talks about Dubai's 'capable and committed leadership that has managed to turn Dubai into one of the most important cities in the world' and that this should give investors 'every confidence in Dubai's future prosperity'.

Boom gone bust

But it is clear that Dubai is going through something of a consolidation period and the $80bn debt mountain is going to take some time to clear. Some would say the bigger the boom, the bigger the bust, although that is not always the case in emerging markets, particularly ones with the underlying business economics of the UAE.

In the case of the UAE, the reasoning is that the oil price should hit its cyclical low early next year, and then recover as the global bailouts and stimulus packages kick in.

Given a six-month time lag between oil prices and the real economy of the UAE that might count property out for most of 2009.

However, the recovery cycle could still prove surprisingly swift, just as the downturn this autumn has proven surprisingly fast. In that case accumulating Dubai property at depressed prices has to be a winner, as Kashani-Akhavan suggests.

See also:
Dubai market at 'tipping point' as Rera warns against halting payments
Dubai property prices to fall in Q4 2008
Arabtec predicts 'substantial fall' in Dubai property market growth
Dubai's off plan projects 'on hold' through lack of financing