After being in the doldrums for a few years, the real estate sector in most emerging and developed markets is showing signs of a recovery.

Much of the leveraged investments that had pumped up real estate prices prior to the global financial crisis have been cleansed from the system and an environment of low interest rates is bringing investors back to the property markets.

Real estate consultant Jones Lang LaSalle expects investments of up to USD 500 billion in real estate globally in 2013 – the highest investment level since 2007.

For high net-worth individuals in the Gulf, which are shrewd real estate investors, the US commercial property sector offers the strongest upside potential, especially as it is expected to grow 15%-20% during the year.

“In Europe, we anticipate that this year will see a similar level of investor activity to last year but with upside potential, particularly from the secondary markets, which are starting to see greater investor interest given their more attractive yields,” said JLL.

“Investment volumes in Asia Pacific are forecast to increase by around 15%, with Asian sovereign wealth funds and pension funds deploying more capital in their home region.” Closer to home, Dubai’s real estate market is also coming in from the cold after a few years of hibernation.

The emirate’s real estate market continues to experience higher levels of residential sales and the prime market is now well into an upturn, notes JLL.

“The recovery in prices is most pronounced in the villa sector (where prices increased 24% in 2012, compared to 12% in the apartment sector). Rents have also started to recover (7% for villas and 6% for apartments in 2012). However, the improvement in prices is largely confined to prime established locations, with less established locations seeing little or no growth in values.”

Buoyed by the business optimism, Emaar Properties – the emirate’s flagship real estate company – announced it will launch new projects such as the Dubai Modern Art Museum and Opera House District.

The company delivered 31,230 residential units apart from two million square feet of commercial space, as the real estate market picked up last year.

Emaar says its business strategy includes “taking advantage of the recent buoyancy in Dubai’s real estate market by developing new iconic projects.”

Still, it needs to be put in perspective, as vacancies in Dubai’s prime central business district (CBD) remain high at around 31%. “Non-CBD locations have even higher vacancy levels, as much as 80% in some sub-markets,” said JLL. “While the overall office market continues to be tenant-favorable, demand is still concentrated on just a few buildings/ locations, and the range of prime buildings in single-ownership is more restricted than the overall vacancy figures would suggest.” Meanwhile, the emirate’s hospitality property market is also picking up, primarily as instability in other lodging markets in the Middle East and Africa (MENA) flare up, said Ernst & Young in a report on the global travel market.

“Continued unrest in countries such as Egypt, Libya and Syria has enabled leisure destinations, such as Dubai, to benefit from the redirected lodging demand…. An increase in tourism from Chinese leisure travelers is anticipated to boost room rates in popular tourist destinations, such as Dubai, in 2013.” The emirate ended 2012 with an overall occupancy rate at 83.3%. In addition, RevPAR increased by 6.4% and average room rate also increased by 6.3%, said E&Y.

Analysts expect the global real estate market to pick up even further in the second half of the year as the clouds of economic doom disappear and businesses are more confident of the future. And Dubai is poised to get a lift as the high tide comes in