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The article 'Brakes on for Dubai Market' in Australia's Architecture & Design magazine is the latest to flag a "bumpy ride" for Dubai's property market. Written from the perspective of how a dip would affect international companies operating in Dubai, it quotes a director of design firm Woodhead as saying that the drop off in work would lead to significant lay offs. Of course the big question facing firms operating in the region is whether this is an inevitable and short-term cooling, or whether it's the start of a more dramatic decline.

Morgan Stanley didn't make themselves overly popular with developers in August with their prediction that Dubai property prices would likely fall by 10% after years of unrelenting growth. This was largely based on the consultancy's view that developers are relying too heavily on "high end" projects at the expense of more affordable housing (which, as anyone who's tried to find accommodation in Dubai will tell you, is hard to argue).

I was in Dubai a couple of weeks back and, based on how things are looking for Aconex and what our clients are saying, it's looking more likely that this will be an inevitable stabilization of a market that was booming at an unsustainable rate. Over the past 6-8 weeks we haven't seen projects being cancelled so much as people holding off making decisions. This is starting to change and, over the past week or two, projects are getting the green light again.

Whereas there may be fewer of the extravagant, showpiece developments that the city has become synonymous with, there is still demand for realistically-priced housing. This will, in turn, drive the infrastructure projects that population growth in Dubai (not to mention the wider region) is crying out for. I think we'll see that these factors, combined with the Dubai's solid economy and banking system, should ensure that Dubai is still a highly attractive market for AEC firms to operate in.

Labels: Global trends