Dubai freehold property: a market for trading and not rentals?

But the reality of this property market is unlike any other in the world. On the one hand, many apartments and villas sold off-plan are being traded at substantial premiums before they are even built.

On the other hand, many villas stand empty in the Emirates Hills district. In some cases because the new owners are speculators just waiting for the price to go up; in others because there are not yet enough tenants in this part of Dubai to fill up the villas. That has meant falling rental yields for new landlords with oversupply hitting rent levels when a tenant can be found.

This may well prove to be a temporary phenomenon. The Emirates Hills area is being rapidly landscaped into the high-rolling Jumeirah of the future, where bankers from the Dubai International Financial Centre will want to park their Porsches.

With all the economic expansion in Dubai, and much of it in the Jebel Ali to Trade Centre Roundabout corridor, these villas should find tenants in due course. Indeed, their rentals could well head skyward to Jumeirah levels then.

But right now the Meadows, for example, is not a good buy-to-let market, with far too many properties for the available tenants. Now is it then worth buying to sit on an empty property?

It certainly could be, and that is what many buyers appear to be doing. But you need to be able to afford to wait, which means you probably have to be a cash buyer with no finance to worry about. However, properties do deteriorate if left empty, and the likely cost of restitution should also be kept in mind.

Now with the arrival of thousands of Springs town houses into this same Emirates Hills area this year, one has to wonder if oversupply will not depress rental levels further at least in the short term.

Thus overall, buy-to-sit-and-wait may have its place as a property investment in a dynamic economy like Dubai. Nowhere else in the world can you make a plausible argument to buy a property and leave it empty.

But Dubai property is very inexpensive, and with the cost of building materials undergoing significant inflation and local rentals, outside of Emirates Hills, still rising, then holding an empty home and waiting for prices to rise and tenants to come may make sense for a certain class of investor.

So far it is the traders who bought early and sold on at a profit that have made money out of the Dubai freehold property boom. The buy-to-let market has yet to get established, except in one or two developments, such as The Greens apartments, where demand exceeds supply.

This is perhaps what you might expect in such a new property market, vis-à-vis a reality that nobody envisaged when the whole phenomenon took off with long queues in the Emirates Towers hotel ballroom less than two years ago. It is certainly going to be fascinating to see what happens.