Dubai has been on a real estate roller-coaster ride of boom, crash and recovery over the past decade as property values halved between 2008 and 2010, but then rose phoenix-like from the desert to regain most of their losses by 2014, said a report

The rallying prices of years 2013 and 2014 in Dubai have set off the alarm so authorities had to react to prevent a market boom-and-crash cycle. Dubai’s market regulators, wielding mortgage caps and a doubling of transaction fees, stepped in to reduce speculation, said a report by leading independent global property consultancy Knight Frank.

This combined with deteriorating oil prices, currency fluctuations, a strong US dollar, to which the UAE dirham is pegged and a series of economic and political failures in different parts of world, means lower levels of demand from most regional and international group of buyers looking to purchase properties in Dubai.

Add an excess of new-build supply into this mix, and the net impact has been a 12 per cent fall in mainstream property prices over the 12 months to June.

Nevertheless, falling prices are not totally bad news. With the government stepping in to curb speculative activity through tightening mortgage regulations and capping price increments, it is evident that lessons have been learnt from the 2008 downturn and the market is heading steadily to be more mature and better controlled.

More interestingly, with price falls continuing to outpace rental value declines, initial yields are rising. Reaching more than seven per cent in rental yields in the mainstream property segment, Dubai still stands tall among real estate capitals in the world for investor seeking income generating properties. Never to forget that returns here are always tax free, the report said.

In addition, the magnitude of decline in prime residential prices (down 4.5 per cent) in the year to June was smaller compared to the mainstream segment.

“Looking into the city’s sub-markets, the picture is a bit more positive as well. In-demand areas are mostly in the prime segment including villas, townhouses and apartments in the Palm, Emirates Hills, Dubai Marina and Downtown for example. Even during the 2008 downturn, prime properties saw lower levels of declines compared to less established areas,” noted Diaa Noufal, Mena Research at Knight Frank Dubai office.