Dubai is not witnessing a new real estate bubble despite rapidly rising property prices, an analyst told investors at the Cityscape property exhibition in Dubai on 8 October.

Speaking to delegates at the Global Real Estate Summit held on 8 October at the exhibition, Nenad Pacek, founder of Austria’s CEEMEA Business Group, said Dubai’s property market recovery is being driven by cash buyers from unstable markets in the Middle East and not by debt-financed speculation, as seen in the emirate during the 2004-2008 real estate boom.

”The latest surge in investments has to do with turmoil across the Mena [Middle East and North Africa] region,” said Pacek. “Dubai is like the Switzerland of the Middle East. About 80 per cent of all transactions in the past nine months have been cash, which tells the story. So it is not speculation like before. It is not a credit bubble.”

Pacek said there was a clear recovery in Dubai’s residential real estate sector and a smaller recovery in the office property market.

“With more [property] supply in the market and cash funding going to other safe havens, growth rates will be more sustainable,” Pacek said. “So there are not enough factors to create a bubble like before. Plus the authorities will regulate more tightly to avoid a bubble. So we will see a continued recovery in UAE real estate and will avoid a boom and bust

“The bounce back in Dubai is in line with historic patterns,” he said. “Typically, in a major real estate correction, you see prices crash by as much as 50 per cent and then recover over a five- to eight-year period to previous levels.”

He said the underlying fundamentals for the regional economy were solid.

“If you are investing in the Mena region, you are investing in a region that has the best fundamentals it has ever seen. The biggest opportunities and growth will be in the key Gulf markets, including the UAE.”