PEOPLE have short memories. Except, that is, about situations where they’ve lost a lot of money. Since the financial crisis there are a lot more investors in the market who’ve been burnt before – and they’ll never forget that time Dubai property prices fell over 50 per cent between 2008 and 2010.
So it’s no wonder there’s been a muted response to Damac’s London flotation, with yesterday’s sale raising significantly less than was originally planned. Investors are obviously still wary and they’re right to be – sort of.
According to Cluttons, average capital values in Dubai’s residential market are now 52.3 per cent higher than this time last year, rising eight per cent in the most recent quarter alone.
But this time the government seems wise to the threats. Since it introduced a limit on the size of mortgage loans and doubled registration fees earlier this year the pace of growth has already cooled – slowing dramatically from the record 23 per cent rise seen in the second quarter. Rental values too have fallen. At the same time developers – including Damac – have come out from the shadows and have committed to new projects, with Expo2020 providing a huge investment boost and an incentive to build, build, build.
Damac’s prospectus calls the Dubai property market a “safe haven” for those seeking stable, high-growth returns. That may be a step too far, but it could be time for investors to start re-thinking their approach to the newly confident emirate.