Dubai property buyers becoming more selective

The Dubai property scene is a curious sight with an endless series of major billion dollar projects launching almost every day. Yet many of the developers appear oblivious to the facts of the local market, which point to a far more selective approach by buyers.

The market is certainly not collapsing, far from it - the market for villas has been particularly lively over the past few months. Nakheel's Jumeirah Island villas are up by almost 20% in that period, and Springs Type 4 town houses bounced by 12% in August.

But The Palm islands have dropped out of favour with investors, and uncompleted villas have been falling in price on The Palm Jebel Ali with premiums slipping from 30% to nearer 10%.

There is even some sign of negative premiums for the first time in the history of Dubai property, particularly in the Burj Dubai downtown and Jumeirah Village developments. This appears to reflect the inability of the original buyers to meet stage payments during the construction process, as well as the high original prices.

It is to be expected that as a property market develops that winners and losers emerge amongst the different developments, developers and districts. It is not always obvious in the early days of a construction boom which places will turn out to be the most desirable locations.

Now that the dust is settling on more and more projects, the sober eye of the property buyer can see things in a new light. Just what are the pros and cons of a particular scheme in comparison to another? Is it right that villas are priced more cheaply than apartments, usually in major cities it is the other way around?

There is also a growing concern in the marketplace about the amount of property construction underway and in the pipeline, particularly high-rise towers. Estimates for the number of new units being built over the next three years range from 85,000 to 200,000, which is at the lowest estimate around 50% of current actual properties available.

Now Dubai is growing rapidly as a city and will certainly be able to soak up a substantial portion of this new property. But it is clear that with so much to choose from the accent is going to fall even more on careful selection of the right property rather than buying anything on the assumption that prices will always rise.

This represents a rapid maturing of the Dubai property sector, and the signs that the market is changing are already obvious to the agents, if not to some developers.