This week starts the delivery of the first of 6,916 apartments in the Jumeirah Beach Residence which will be completed by June. The sudden introduction of such a large number of similar apartments in one place has long been seen as a test case for the capacity of the Dubai property market to absorb new supply.
Developer Dubai Properties, part of the Dubai Government owned Dubai Holding, has scotched rumors of further delivery delays and 35 towers will be handed over to their owners within 12 weeks, around 50 per week.
Officials said 'market factors out of our control' had delayed final completion by six months but the apartments were now ready for delivery. They noted that upgraded floor spaces and enhanced finishes would more than compensate for the delay, and no other penalty would be paid.
But property market watchers are more interested to see how the delivery of the Jumierah Beach Residence impacts on the Dubai real estate market as a whole. Will the handover of 6,916 apartments have an effect on local house prices, which have stayed at a plateau since a final spike last September?
The answer is that the JBR test to the supply and demand balance will not be apparent until the autumn. It takes time for people to move their home, and we do not know how many JBR apartments are second homes for holidaymakers, it could be a large proportion in this beachfront project.
Whatever the final assessment, the completion of the JBR is a huge addition to the high-rise condominium section of the Dubai real estate market. And if this new supply hits the market at a time when demand starts to weaken then the delivery of the JBR could well be a seminal moment.
Observers will also be paying keen attention to the traffic flow in and out of this development. Will the impressive new interchange for the Dubai Marina open on time and be up to the job? Certainly the blockages during the Dubai Boat Show were much criticized recently.
On the other hand, the Dubai Marina is an excellent project by any world standard, a fabulous integrated, upscale beachfront community with great leisure facilities. And if buyers find their property prices hit by an initial oversupply then holding on for the inevitable recovery makes a lot of sense.
For if the market forces of supply and demand take their toll on Dubai real estate prices then it will be projects at a far earlier stage of development that bare the real impact of the downturn. Investors who own attractive property in a prime location usually do just fine in the long run.
It is the secondary locations that are always more tricky to judge and that fare badly in a downturn. And that is why prime property is usually the preferred investment class, and the Dubai Marina and Jumeirah Beach Residence are definitely in that class.