Dubai property bubble

If a property bubble is the next thing in Dubai's future, then investors should think about looking elsewhere, but not too far away.

News from the Dubai property market comes fast and furious these days, with multiple newsworthy events happening most days of the week.

Already in 2008 the Dubai property prices have soared to new heights, causing the government to impose a stricter rental cap on everything else. A shortage of supply fuelled by low availability of raw materials has skewed the supply and demand infrastructure of the property market economy and as a result prices in Dubai have soared to the second highest in the world.

With all of these different events happening, many analysts are now worried that the Dubai property market could self-correct as a result of the large inconsistencies within the system. When inconsistencies result in large inflation primarily due to a lack of supply to meet the demand, the emergence of a bubble is often the end result. This is exactly what analysts are worried about in Dubai and some are now even going beyond that worry and predicting that the property bubble of Dubai is just looking for the right trigger before it bursts.

Naturally, this has resulted in wary investors looking elsewhere for property investments and many of those investors are going right next door to look at the Emirate of Abu Dhabi.

Abu Dhabi's real estate market does not have the superstar status of Dubai, but at the same time it is based on solid fundamentals. Good growth in supply, a hands off approach by the local government and a relatively high demand are all good reasons to take a look at the Abu Dhabi property market and if trends are any indication, analysts might very well be adding a fourth reason to that list; Abu Dhabi's property market eclipsing Dubai's in property sales.

While that moment is still a long way off, current trends show unequivocally that if Dubai's property market continues its direction and Abu Dhabi is able to grow in a sustainable manner, then it is a moment that will certainly happen at some point. Numbers released from the recently held Abu Dhabi Real Estate and Investments Show seem to indicate that Abu Dhabi has already begun upward motion towards catching Dubai in property sales and investors will have to keep an eye on those numbers in coming months to see if they continue to hold up.

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