Since 2002 the real estate market in Dubai has seen rapid growth. The reason behind this was the change in ownership legislation that was passed by the governance post 2002.

The main point of the legislation change was to allow non-nationals to own property outright freehold in the region. This as an effect has had a resultant effect of bringing large investment into the region and attracting a large amount of foreigners into the region.

Due to the tax implications of working in the area (100% tax free) amongst other things Dubai has attracted a massive amount of workers in to the region.

With this initial massive influx of workers and individuals into the area there was a gross under supply of housing in the area, and this has had the effect over the past few years of raising property prices as well as rents to unprecedented levels in the region. Residential property values are still rising in the region but at slower levels seen over recent years.

With developers like any business observing this aggressive appreciation being achieved in the property market in Dubai larger amounts of developers started to build ever more opulent as well as quantities of accommodation to cash in and also satisfy demand.

What many are starting to believe now is that this demand that had fuelled the growth in the property market was mainly fuelled by investors speculating and not end users.
Also there will be a large amount of developments that will reach completion over 2009-2010, so many are believing that these factors combined will cause a correction in the market due to an over-supply in the market.

So the main factors that will determine if a correction is imminent in this region is going to population growth, and skilled at that. If Dubai can continue to support an expanding skilled workforce who can afford the high housing costs then we can expect to see potentially a stabilising of the market if not then I would assume a potentially large correction in store specifically in Dubai.

This has been one of the reasons that many investors have started looking at other less developed Emirates undergoing growth to invest in property.