After 10 years of spectacular boom and bust, Dubai’s real estate market may be finally approaching reality.

Between 2003 and 2008, the emirate quickly developed a reputation for man-made offshore islands, super-tall towers, and soaring prices. More recently, it has become synonymous with a real estate bubble that burst in 2009, a credit crisis and $385bn of unfinished projects that are currently languishing on hold.

Now, that may be starting to change. Since the end of last year, optimism has slowly returned to Dubai’s economy and the property market has started to show signs of recovery. Unlike in the past, when there was little other than the height of the building and a daring design to distinguish one property in Dubai from another, today, as in markets all over the world, location is key. So far this year, prices for high-quality properties in good locations have begun to rise and this has given developers the confidence to move ahead with new projects.

The first to test the market’s appetite for new projects sold off plan have been government-related entities, such as Nakheel and Emaar, which still have land to develop on established schemes including the Palm Jumeirah and the Greens. The results are encouraging. In early April, Nakheel sold 30 per cent at the launch of its Palma Residences project and, in late May, Emaar sold all available units at Panorama Views on launch.

Whether other firms can replicate these successes is debatable. Most smaller developers hold land in areas that are not well established. These projects are unlikely to attract the investor interest they need to move ahead, will not be built in the near to medium term and may not even be built in the long term.

Without projects sprawling out into the desert and new islands being reclaimed, Dubai’s real estate market should be a much more realistic proposition than it has been in the past. That should work just fine, as long as investors can accept returns that are realistic too.