The mushrooming of construction cranes across Dubai is evidence that the housing market is heading back to its booming best.
Dubai property builds momentum
In the dusty desert sidings off the Umm Suqeim Road, behind brightly coloured hoardings, the sounds of construction ring clearly above the rumbling of the traffic.
Billboards promise another new Eden; this time in the shape of a Donald Trump-fronted, 7,205 yard par 71 luxury golf course surrounded by landscaped gardens, state-of-the-art gymnasiums, a high-end club house and hundreds of luxury homes - available, of course, for off-plan sale.
It's a picture repeated across Dubai at the moment with new cranes rising up again across the city skyline - often close to ones that have lain silent for years. Investors queue up, regularly in the shadow of developments stalled by the previous property crash, to put their deposits down on what are, right now, some of the fastest-growing property prices in the world.
"Dubai is back driving the international property market and all eyes are on the emirate again," says Ziad El Chaar, the managing director at Damac Properties, the developer that has recovered sufficiently from the battering it took during the last Dubai property crash to launch the Akoya Pearl scheme, a 28 million square foot village built around the Trump course.
"It is the right time to bring a new living concept to Dubai."
Certainly after falling in some places by more than half in the wake of the 2008-09 financial crisis, Dubai's property market has staged a dramatic comeback over the past year.
More than 23,000 permits for new constructions were issued in the emirate last year and the number this year looks set to climb further as more and more off-plan investors rush back into the market.
For property that has already been built prices are rising sharply, too. According to the property agent Knight Frank, prime property prices in the city grew by a staggering 18.9 per cent in the six months to March - the fastest over that period in the world and the third-fastest over the entire year. The property agent Asteco reports sales prices for apartments across the city increased by 12 per cent between April and last month, recording a 38 per cent increase for the year to the end of June as a whole.
This month the Dubai Land Department, a government body, reported a surge in both the number of property transactions taking place in the emirate during the first half of the year and in property values.
It found a total of Dh108 billion worth of property, both commerical and residential, changed hands in Dubai during the first half of this year, an increase of 30 per cent on the total recorded the previous year. These comprised 30,469 properties that changed hands in the emirate during the first six months of the year, 60 per cent more individual transactions than the 18,953 recorded a year earlier.
"The high percentage of growth reflects ongoing real estate developments in the emirate that continue to attract local and international investors to Dubai," says Sultan bin Mejren, the director general of Dubai Land Department.
But for others the rapid inflation has triggered concerns that values have been rising too fast and has drawn comparisons to 2008, when house prices recorded double-digit gains from quarter to quarter.
"From about March last year strength started to come back into the market and we have seen prices rise by about 18 per cent over the year," says Helen Tatham, the director of residential at Knight Frank.
"I would hope that we don't continue to see that level of price rises going through this year. That sort of level of price rises is not sustainable but in the future we expect to see these rises cooling down to perhaps 10 per cent or 5 per cent in a couple of years' time."
Other experts agree the price increases have been spectacular. "We have seen values rise considerably over the past year. In the areas of Dubai we cover, we are seeing prices rising by between 20 and 25 per cent compared with last year," says Richard Paul, the director of residential valuations in Cluttons' Dubai office.
"We believe that by the end of the third quarter we will start to see the government bringing in a number of measures such as the mortgage cap aimed at taking the fizz off the market and this is something we believe is necessary," he adds.
The UAE Central Bank is one of the parties that appears to be most worried about Dubai's spiralling property prices. In December it floated the idea of restricting the amount of money buyers could borrow on their home loans as a way of taking some of the heat out of the market.
Initial plans to set the limit for expatriates at 50 per cent and 70 per cent for nationals were delayed after banks and estate agents reported a widespread slowdown in the Dubai market at the start of the year. Nonetheless the Central Bank is in discussions to introduce a cap, probably of about 75 per cent for expatriates and 80 per cent for nationals.
Yet, according to the Land Department data, 22,748 transactions or nearly three quarters of the total that have taken place during the first six months of the year were paid for in cash without the use of a mortgage. The fact that so many of Dubai's property purchases are paid for in cash has led many experts to complain that bringing in a mortgage cap will do little to reduce rampant price increases.
Moreover, experts say the caps will do nothing to curb the large proportion of the Dubai property market currently under construction, which is fuelled by speculators who put down deposits on off-plan homes to sell them on in the short term making a tidy profit in the process.
So what else can be done to prevent another bubble bursting again?
"It's largely a matter of supply and demand," says David Nunn, a partner in commercial property at the law firm Berwin Leighton Paisner's Dubai office.
"If you do not have enough housing supply to match demand, then in a free market prices will tend to rise. So, unless demand can somehow be curbed, the only way to really prevent price inflation - and potentially another property bubble - is to build more," he says.
"Given the current market, it would be possible to limit sales prices just as rent rises are limited in Dubai, by reference to some sort of index. However, in my experience none of these market-distorting measures actually works satisfactorily in practice, especially over the longer term.
"At the moment the system is set up to allow speculators to make money out of buying off-plan properties because, for usually only a relatively small initial cash outlay, they can take a large element of risk exposure, especially financial risk [which can build up over time to as much 100 per cent of the price before anything has been delivered]," says Mr Nunn.
"It would be possible for the Government, if it chose, to de-risk this process for buyers and restrict off-plan investment in development, either by only allowing, say, a certain proportion of schemes to be sold off plan, or by limiting the amount of money investors could pay by way of the total down payment for off-plan properties to say 10 or 15 per cent.
"Developers would then have to rely on their capital or borrowing to finance the remainder and assume the lion's share of the financial risk.
"Dubai was a bubble created in order to get things built but it was for a long time thought to be a manageable bubble, which was expected to expand and contract but never to burst," adds Mr Nunn.
"The model served the city well up until the financial crisis. So 'speculation' is not always a bad thing. It got things built in Dubai that possibly otherwise wouldn't have been built."
Back on the Umm Suqeim Road the clanging and drilling of construction workers continues.
Perhaps only time, and global economics, will tell as to whether the construction boom and the rise in property prices will be able to continue apace - without another major bust stopping them.