Property investors in Dubai are slowly beginning to show more caution when purchasing property in Dubai, as there exists enough historical data to indicate which developments and property types are sure to offer the best capital growth returns and rental yields.

Dubai, being one of the seven emirates that compose the Unite Arab Emirates (UAE), is nestled on the coast of the Persian Gulf.

Until only a few years ago, the area of Dubai was a small fishing community with a speciality in pearl fishing, however it is now a 'major international business hub and a top ranking property hotspot.'

As the population continues to grow rapidly and steadily, (an expected increase from the present level of 1.67 million to 3.5 million by 2010 is predicted), so does the demand for property and developments to be constructed and made available to locals and international alike.

The unique levels of success achieved by Dubai's unseasoned property market in such a short space of time could never have been projected. With investor interest in the emirate so apt, and with the Dubai government's commitment to the development of Dubai's long term economic fortunes, it is becoming increasingly clear that the short, medium and long term forecasts for the Dubai property market is incredibly strong.

Dubai's government have recently created a series of themed free zones such as Dubai Media City and Dubai International Financial Centre means that even more international companies are choosing to base themselves in the emirate while taking full advantage of the attractive fiscal and structuring arrangements on offer in Dubai.

These overseas companies are continually bringing in investments and creating vast employment opportunities, which accordingly attract increasing numbers of expatriate professionals to Dubai, annually. By seeking accommodation to let or purchase, these professionals continue to fuel the property market fire.

As a result of the forward thinking government's approach to the development of Dubai, the emirate is so attractive an investment and lifestyle opportunity and destination that many visitors to Dubai end up choosing Dubai as a destination for investment.

Dubai can have great confidence in the fact that the government of Dubai have interests in all the major real estate development companies in the emirate. It is therefore 'absolutely in their best interests for the real estate sector to remain attractive, buoyant and growing.'

An investor who purchases apartments in the best, most accessible areas of Dubai can enjoy the best rental yields currently available. Alternatively, an investor who would like to buy off plan will find that well proportioned and situated villas and houses will return the best capital appreciation and sell more quickly.

With the demand for completed apartments and villas to rent or purchase in Dubai currently outweighing supply, is slowly but surely creating a problem. One factor that appeases in this case is the fact that the rate at which new high rise developments are coming to completion is easily curtailing the problem (in the short term), however, the constant rise in rental rates do not help ease matters.

According to recent statistics, approximately 800 new international residents set up home in the emirate daily, meaning demand consistently surpasses supply and is ensuring the property market remains buoyant.

Following a decision by Sheikh Mohammed bin Rashid Al Maktoom (UAE President), foreign nationals are finally allowed to buy property in Dubai for the first time, further opening up the region to international property investment.

However, there remains a number of draw backs when looking to purchase property in Dubai: Free-hold ratification can take a great deal longer to acquire than initially anticipated, and local laws make obtaining mortgage credit a horrible hassle.

When it comes to Dubai's future, the local government is ready with a plan! Dubai may possess the title for the leading trading and commercial centre in the Middle East currently, but now Dubai wants to establish itself as the number one tourist destination in the region and possibly the wider world in time.

To ensure Dubai reaches its target of number one tourist destination, developers are creating the multi billion dollar development, Dubailand, 'which will take until 2018 to complete fully and which should create a brand new holiday home market as well as creating demand for villa accommodation to let around the Dubailand vast site.'

Property investors are watching the development phases keenly and seeing which new property developments being announced are most likely to prove irresistible to the tourist market in the medium to long run.

There is still so much to fire to fuel the property investment spark in Dubai. The unrelenting commitment of the local government to promote the emirate in the best possible light gives an investor the confidence he needs in Dubai and the levels of overseas interest in Dubai for employment, business and leisure means that an investor has a growing market to rent or buy his underlying investments.