It is a Saturday morning and in the shade of the Burj Khalifa there is screaming and shouting. Police have been called in to keep a lid on an angry mob as tempers fray and people shove each other out of the way in a bid to get to the front.
There are probably few cities in the world where a property launch can incite minor social disorder, but this is exactly what happened when Dubai’s Emaar started sales at one development in April.
According to data from lender Deutsche Bank, average property prices in the emirate rose for the sixteenth consecutive month in March. This has led to concerns that Dubai could be entering into a new real estate bubble, similar to the one whose bursting in 2008 led to a collapse in prices of up to 60 percent.
“We are concerned about the level of growth which we’re seeing, because it seems quite evident that there is speculation back in the market,” says Matthew Green, head of UAE research at real estate services firm CBRE Middle East. “We can see it with the recent Emaar launches, where they’ve sold out and lots of hype has been created.” This hype has been supercharged by the announcement of several new megaprojects, including Mohammed Bin Rashid City, which — when complete — will boast more than 100 new hotels and the world’s biggest shopping mall.
Worries about another bubble have been confounded by the activities of some investors, who have been seen advertising properties online at a mark-up of as much as 30 percent, only hours after making the original purchase. “We should be seeing [price] growth, but the flipping mentality appears to be coming back,” Green adds.
For some investors, all of these developments are eerily familiar, with many still reeling from the consequences of the last crash, which halted work on many of Dubai’s real estate projects.
One of them, Taimur Rana, did not consider himself a serious investor when in 2005 he purchased four properties at the Dubai Lagoon development.
The four one-bedroom apartments he bought at the residential community, which was to feature restaurants, a shopping mall and a man-made lake, were intended for his children.
The properties he bought were scheduled for delivery in 2007, but he is still waiting more than six years later, with Dubai Lagoon a half-finished building site. In the time since, he and his family have been forced to live in a rented property elsewhere in the emirate.
“I’m paying rent — AED115,000 for a two-bedroom apartment in The Springs. Over the cost of six or seven years I’ve paid nearly AED1m. It’s a complete headache for us,” he says.
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