After a five-year roller-coaster ride, signs of normality are returning to Dubai's housing market.
Prices are still dropping, but latest reports suggest that the days of huge dives and predictions of impending doom may be over.
In the fourth quarter last year, apartment prices in Dubai dropped a relatively modest 2 per cent, with villa prices flat, according to a report released Tuesday by the property firm Asteco. Overall housing sale prices in Dubai dropped 8 per cent from the last quarter of 2009, Asteco said.
In many markets, that might be cause for panic.
But Dubai is starting to operate in the way that housing markets are supposed to function. Buyers are scooping up high-quality property at good prices, while poorer-quality developments with an abundance of units are languishing.
In some suburbs, prices are down by half from the heyday, a point where bargain hunters are ready to act, agents say.
"Realistically, prices are now where they should be," said Greg Antioch, a sales executive with Cluttons. "In the glory days, prices were inflated and no way that could continue. It had to come to an end."
Cluttons data released this week generally are in line with Asteco's report. Apartment prices were down 2.4 per cent in the quarter, Cluttons said, while villa prices dropped 5.1 per cent - a more pessimistic view than Asteco's.
But both reports agree that established "lifestyle" oriented developments with amenities such as golf courses and pools are holding their prices.
At the same time, the market has started to flush out owners who were desperate to sell, Mr Antioch said. Distress sales are now a relatively small portion of the market, he said.
The remaining owners with property on the market are sticking to their prices.
"Sellers are digging in their heels now," Mr Antioch said. "Buyers are pushing, trying to get lower prices, but they are not going to get the price range they are looking for."
The number of transactions is still low, but estate agents say the fourth quarter was the best sales quarter last year.
"It seems to me that everyone had a better fourth quarter," said Billy Rautenbach, the managing director of the Property Store. She said sales varied throughout Dubai, depending on the product. Apartments in many developments struggled, while prices for two to four-bedroom villas were unchanged.
"If the property was a good property, prices remained quite consistent," Ms Rautenbach said.
The numbers support that view. Apartments in the Dubai International Financial Centre, Discovery Gardens, Palm Jumeirah and the downtown Burj Dubai were unchanged in the fourth quarter of last year, according to Asteco's data.
Palm Jumeirah has "experienced the largest drop in sales prices since the beginning of the year", Asteco reported. But the project "still commands one of the highest sales prices and reports significant transaction activity", the firm said.
Developments with a large number of units on the market continued to see declines. Prices dropped 4 per cent in the quarter in the Springs, Dubai Marina slipped 5 per cent and Jumeirah Lake Towers fell 7 per cent, according to Asteco.
By all accounts, a new mature market, very different from the market of the boom years, is developing. It is a two-tier market with haves and have-nots, offering buyers a variety of choices.
"In the past the buyer focused on where they could afford to live," Mr Antioch said. "Now it is where they would like to live."
Some elements of the market heyday are clearly now the stuff of memories. Off-plan sales barely exist anymore, agents say.
Buyers want only property that they can touch and inspect. The days of selling property on the basis of fancy brochures and cool videos are long gone.
The investor who bought property with the idea of quickly reselling it is also fading into history.
Declining rents will continue to put off potential long-term investors. Overall, rents declined 17 per cent last year, after a 24 per cent drop in 2009.
"The rental proposition for investors isn't very attractive, so it's going to be the end users" buying property, said John Allen, the director of research for Asteco.
Buyers these days actually want to live in the property or use it as a second home, agents say. Instead of international speculators, the market is primarily driven by people who are already living in Dubai - either renters looking to buy or owners interested in moving to bigger homes.
It's no longer a market dominated by the wealthy. The typical buyers have their budgets capped at Dh1.5 million (US$408,385) , says Propertyfinder, an online property portal. Less than 6 per cent of the site's users were considering listings above Dh1.5 million.
The market should be aided by the return of mortgage companies such as Tamweel and Lloyds, which are once again starting to offer accessible loans on Dubai property. Lenders have become "shrewder as to the developments on which they choose to lend, including stricter criteria based on the developer's reputation, specification and location," Cluttons noted in its report.
All these factors characterise a market finding a sustainable level. But that prospect will be challenged in the year ahead as developments that were stalled during the global economic crisis are completed. As a result, more price drops are expected this year, analysts agree. There are simply too many properties on the market for prices to flatten out; buyers have too many choices.
But some areas are definitely stabilising. "Sale prices in select locations will become more or less stagnant; however, new areas or unfinished products will continue to see a decrease in sales prices," Asteco predicted in its report.
Last year "was a year of major correction", Mr Allen said. "Any correction [in 2011] will probably be more subdued, especially in more established areas."