Dubai’s drive to diversify its economy is key to the growth of the real estate sector in the emirate, according to Khatija Haque, head of Mena research at local bank Emirates NBD.

Speaking at MEED’s Dubai Real Estate 2020 conference today, Haque said the Dubai economy is much different today than it was in 2008, when the market suffered its crash. Six years ago, construction and real estate accounted for one-third of the economy, but that figure now stands at about 21 per cent. This is partly due to a strong tourism sector, which has grown from 12 per cent to 16 per cent of the economy and is poised to grow even faster in light of Dubai hosting the World Expo in 2020.

The rise of tourism and other sectors, such as trade and medical tourism, and Dubai’s emergence as a financial hub, will also help support the resurgence of the property market. In addition, the rebound in the global economy is serving as a key pillar of growth in Dubai’s property sector.

Another key factor supporting the sustainability of the property market during the current growth phase is that fewer investors are relying on bank loans to finance purchases, Haque said. As a result, bank lending is no longer a main driver of real estate prices, which means the banking sector is much less exposed and so is in a much stronger position.

Asked if there is a risk that investment could dry up in Dubai if the political situation in the wider Middle East were to drastically improve, Haque said such a scenario is unlikely in the near term. “While we hope that the [political climate] in the region will improve, it is likely to be gradual. The situation in the region is not likely to change suddenly, so there is little risk of an impact on investment,” she said.