Housing markets always require a magic spark or catalyst that causes a recovery.
The UAE property sector has softened since December 2014 as oil prices tumbled. The decline came following the authorities' doubling of fees on sale transactions to 4 per cent and significantly increasing the down payment required on mortgages to deter market speculation and flipping of property.
Since then, however, oil prices have rebounded and the speed at which property prices are declining has slowed, which is generally a good indicator the end is coming.
Market swoons only last for so long in the property world and are always followed by a recovery. What you need to see first though is a recognisable market-bottoming event, such as a big buyer moving into a distressed market.
Perhaps this is what we saw in mid-September with the attacks on Saudi oil installations, followed by an announcement that Brookfield, the world’s largest commercial property owner, was entering into a Dh5 billion joint venture with Meraas to own and operate its 1,400 Dubai units in a heavily oversupplied retail market.
Brookfield has grown big by buying at low points in property markets all over the world. Warren Buffett has done a similar thing buying shares in major US companies during stock market crashes. Brookfield is also currently buying big in Brexit-depressed London.
This is a bold call both for London and the UAE, and may retrospectively be a brilliant one. Saudi Arabia's Prince Alwaleed bin Talal buying into London’s Canary Wharf in the early 90s at another cyclical low is a good example of how such a move can pay off.
There are two major macroeconomic reasons to believe UAE real estate is set for an imminent rebound: higher oil prices and falling local interest rates.
We are far from the days of $26 a barrel oil in early 2016. Crude has been back above $65 and there is reason to be optimistic about higher prices to come. Most oil analysts think the attack on Saudi oil infrastructure has put a floor under oil prices.
Then again, Saudi Arabia has a new energy minister, Prince Abdulaziz bin Salman, who is committed to controlling supply. Other Opec and non-Opec countries are co-operating to keep prices up, while US shale oil producers are beginning to struggle to maintain production.
In addition, new global monetary easing by central banks should be good for energy prices, even if this is happening to offset a global economic slowdown.
That was certainly the experience for crude after the loose monetary policy that followed the global financial crisis. Higher oil prices then helped to bring an unexpectedly quick revival in the UAE property sector, despite an oversupply much higher than anything seen today.
More directly lower interest rates courtesy of the global central banks make owning real estate cheaper for mortgage payers, and that leads to higher property prices. Indeed, probably the oldest catalyst in the book for a property recovery is lower interest rates, and the UAE Central Bank followed the Fed rate cut this month.
Dubai is also firing up to deliver a bumper Expo 2020 next year. This will bring hundreds of thousands of extra visitors to the emirates and focus attention on its vision for the future.
These image-raising events are not to be underestimated for their impact on real estate. The first Dubai real estate boom took off after the 2003 International Monetary Fund and World Bank meetings were held in the city.
Market theorists will tell you that the best cure for low prices is: low prices. New visitors to Dubai for Expo 2020 will doubtless have their attention drawn to the lower prices by global standards and high, tax-free rental yields, as well as the huge range of high-spec realty.
If the authorities wanted to give the market a push in the right direction it is also possible to reverse the two actions that tipped it over in December 2013, and reduce transaction costs and improve mortgage-lending terms.
A whole raft of initiatives has been launched this year to revive the market. There’s a new higher committee to rebalance supply and demand of property, and long-term residency visas for entrepreneurs for up to 10 years.
The Dubai Land Department will also replace the Real Estate Regulatory Authority for registering rental contracts, and regulating the relationship between owners and tenants.
This could herald a new investment-friendly environment for landlords to both encourage them to invest more and persuade tenants to buy their own homes rather than rent.
Peter Cooper has been writing about Gulf finance for 25 years