Dubai real estate, the knockers come out!

A gentleman who will remain nameless recently cornered me at a business group lunch to explain what he would like to write about Dubai property in a local newspaper, except that he felt it might make his continued presence in the emirate unlikely.

Slowly it dawned on me what his real problem was; this poor guy sold mutual funds for a living and was seeing all his would-be clients investing their money in real estate rather than his recommendation of the month.

Indeed, it was only moments later that a bubbly blonde lady from London of real estate provenance laid into me with a ripping yarn about the rising premiums being paid for property on The Palm, Jumeirah. Some times I wish my columns were written under a nom de plume.

However, both Mr. Doom and Ms. Boom were cautious on the outlook for the Dubai Marina where even the developers of the Jumeirah Beach Residence concede that oversupply of apartments is likely in 2005-2006. Where they sharply diverted was on the prospects for the rest of the market.

Mr.Doom was down on the Meadows development. No matter that one lucky owner has just offloaded 11 villas fronting the Montgomerie Golf Course for a 33% premium, not bad if you consider that the buyer would only have put 20% down and had made a USD1.8m profit in less than 18 months.

But Mr. Doom could not see it working. Values would plunge, predicted the same man that has been selling mutual funds to the enthusiastically innocent over the past three years.

Ms. Boom had 'discovered' Dubai earlier this year and decided to move here to open an estate agency. She was now pedaling her expertise to anyone who would listen, although her fixation with The Palm, Jumeirah, was a little wearing after a while.

I think her argument really came down to the fact that property on The Palm was sold off very cheaply to jump start the real estate market in Dubai. This it has done most satisfactorily with developers leaping to build in uptown Dubai, and plots changing hands like apples and oranges on the Palm long before anything is actually built.

Personally I wonder if the best investment options will prove to be the more modest options. The town houses at The Springs and apartments for professionals at The Greens look great long-term rental options, while yields on larger properties like The Hattans have fallen recently.

It may be that as in other cities the highest yields do not necessarily go with the biggest properties. From that perspective the glamour of The Palm might prove disappointing in cash terms, and greater gains lie in other developments.