Dubai still most popular despite 2009 property woes

Dubai continued to stand alone as the preferred location for home buyers in the Gulf in 2009, despite its property market being hardest hit by the global downturn.

More than 43 percent of respondents to the FutureBrand Gulf Real Estate Study , released on Tuesday, said Dubai was their number one choice in the region despite house prices slumping by up to 50 percent in some parts of the city during 2009.

The percentage rose from 36 percent in 2008 but its lead at the top of the list was reduced by its neighbour Abu Dhabi, the report showed.

The UAE capital more than doubled its appeal among home buyers looking to purchase a second or vacation home in the GCC countries.

Twenty-three percent of respondents picked Abu Dhabi as their preferred location in 2009, compared to just 11.5 percent the previous year.

The report said it saw Abu Dhabi as having the potential to take over from Dubai as the top property location in the long run.

"With its financial strength and its rise as a destination of note, Abu Dhabi is best placed to lead the region's real estate recovery," the report said.

"It is also poised to be the first place in the region to attract foreign investment and partnership opportunities in the future, should the emirate seek these," it added.

But Jae Hwang, executive director at FutureBrand said Dubai still had a lot going for it and that it was premature to announce the death of its real estate industry.

“There is definitely a truth in the matter that the business model for real estate in Dubai needs to be reevaluated and I believe companies are starting to do that…our study shows that it’s still the most popular place to live.”

He said mega projects like the Burj Khalifa and Dubai Metro becoming a reality added to the city’s appeal to would-be home buyers.

Elsewhere in the Gulf, Doha was the third most popular city - chosen by just over 11 percent of respondents - while Jeddah (9.2 percent) and Muscat (5.9 percent) completed the top five destinations.

All top five locations increased their appeal in 2009 but Sharjah and Ras al Khaimah saw big falls last year compared to 2008.

Sharjah dropped from being the most popular location with 9.9 percent of buyers in 2008 to just 0.4 percent last year while RAK fell from 6.8 percent to 0.8 percent.

Riyadh, Manama, Kuwait City and Fujairah also lost appeal among home buyers, FutureBrand's report said.