One issue clouding judgment is concern about supply. Property consultancy Jones Lang LaSalle estimates at least 23 thousand new units will come onto the market this year. It certainly seems like a high figure, but it's important to put these numbers into context.
There are almost 340 thousand properties in Dubai, so an extra 23 thousand units amounts to an increase in total supply of a little over 6 per cent. A 6 per cent increase in supply may or may not be significant, depending on the current level of demand.
So how do you evaluate the current level of demand? Recent sales are a good place to start. According to official figures from the Dubai Land Department, the number of sales in the fourth quarter of 2011 rose 64 per cent from the previous quarter.
"Clearly demand for property in Dubai is rising at a much faster rate than supply. At DAMAC Properties we believe that concern over supply issues has been greatly exaggerated" said Niall Mc Loughlin Senior Vice President of DAMAC Properties.
It's not only the quantity of sales which is increasing, Dubai house prices rose by 2.3 per cent in the last three months of 2011, according to the latest Knight Frank Global House Price Index. The extraordinary rate of growth puts Dubai among the top ten fastest growing real estate markets in the world for the period.
While the high end of the market is recovering quickly, the UAE real estate market has become increasingly fragmented which means there is little benefit in reviewing the market as a whole. Demand and prices are rising convincingly in premium locations within Dubai, but these price gains are to some extent being offset by price declines in some of the Emirate's less sought after locations.
"For the past 12 months DAMAC Properties has seen prices increase across the luxury segment of Dubai's real estate market. The report by Knight Frank substantiates our own outlook. We are experiencing the strongest demand in three years across our range of premium developments at Dubai Marina, Downtown Dubai, Business Bay and the DIFC" Mc Loughlin commented.
There is a strong flight to quality in both Dubai and Abu Dhabi, as existing residents seek to upgrade and new buyers aim to take advantage of market conditions which currently offer extraordinary value for money.
While there is a definitive two-tiered market in the UAE, even within that there is further fragmentation. The occupancy rates for different developments in the same locations can vary wildly. People are now identifying with particular developments within certain locations and are basing their decision on which apartment to rent or buy primarily on which developer completed the project.
Property experts Asteco have also pointed out in their first quarter report that developments in established locations are now approaching full occupancy and that rents are increasing.
The occupancy rates of DAMAC Properties' more established towers 'The Waves' and 'Marina Terrace' in Dubai Marina are as high as 94 per cent and 97 per cent respectively.
More impressively, occupancy rates in the more recently handed over developments such as 'Ocean Heights' and 'Emirates Gardens' are 91 per cent and 95 per cent respectively.
"Occupancy rates are an excellent indicator of where the supply and demand dynamic is currently. With occupancy rates close to 100 per cent, you would have to say that supply and demand is roughly in equilibrium" said Mc Loughlin.
The chorus is growing stronger on Dubai's property recovery with real estate adviser Cluttons saying in a recent report that Dubai's residential property market was "now more secure and transparent," with residential sales continuing to build on "a positive start to 2012."
Anyone would have to concede that Dubai is booming again. There is further evidence at the international airport, with passenger numbers at record levels. Additionally, hotel occupancy is among the highest in the world, with the Dubai Department of Tourism and Commerce Marketing revealing hotel occupancy soared to 86 per cent in January.
"The market dynamic is changing so quickly that people are finding it difficult to keep up. For three years everyone has been talking about how bad the Dubai real estate market is that they've failed to notice the upturn. You will start to see the positive momentum build very quickly from this point onwards" commented Mc Loughlin.
Dubai's economy is expanding, and that is also beginning to stoke investor confidence. The economy grew by 3.3 percent in 2011 and is predicted to expand by 4.5 per cent in 2012, according to estimates from the Dubai Supreme Fiscal Committee.
"Reports of increasing demand are being reflected in our diminishing supply of inventory in our completed projects. At DAMAC Properties we have very few apartments left in our projects which have been handed over, and we are now seeing investors shift their focus to projects which are more than 60% complete" Mc Loughlin commented.