The idea that Dubai will soon boast the most expensive real estate in the world is not as absurd as it sounds. All it takes is a modest extrapolation of growth trends for rentals in the Dubai International Financial Centre, and a continuation of the current cooling off in markets like London Prime and this is a fact.

Dubai real estate investors have found villas providing the greater capital appreciation over the past few years. But rental yields have fallen as a consequence, making apartments more attractive in certain locations. Is this a trend likely to continue in 2008, or will villas emerge again as the better choice for investment?

This autumn the Dubai real estate market has absorbed two massive apartment projects - the shoreline apartments on The Palm Jumeirah and the Jumeirah Beach Residence - a total of more than 7,500 units. Both offer an excellent beach location but service charge differentials have become important.

New Dubai property launches are few and far between these days. The new escrow account law which controls development funds during the construction process, spiralling construction costs and tougher lending conditions for project finance, have all contributed to the slowdown. Yet demand remains strong and off-plan selling has shifted to the Northern Emirates.