A surge in development
There are huge expectations for the year 2014, at least on the realty front. A new research report has estimated that nearly 28,000 new residential units will be delivered this year. Even taking into account delays in timelines, this is a significant figure that will add to the ever-expanding supply of property in the emirate.
Development is taking place across the city and not just for residential units, but increased focus has been placed on commercial property as well as retail and entertainment. In fact, Europe will be re-created as part of The World project, spanning six islands and will feature villas, hotels and marketplaces inspired by the architecture and lifestyle of the continent. It will also include snow and rain-lashed streets.
In terms of demand, the total value of real estate transactions in Dubai has gone up by 53% to AED236 billion in 2013 when compared to AED154 billion last year. Price hikes can be especially noticed in secondary residential areas or the more affordable parts of town. Rents have increased the most on a yearly basis in areas such as Sports City, International City and JLT.
With these changes taking place in the city, there has been a warning call for risk to Dubai's competitiveness. According to Hamad Buamim, the president of Dubai's Chamber of Commerce and Industry, a huge risk in real estate prices will have a negative effect on market competitiveness. He stressed that the property market must remain an "enabler" rather than a "driver' of growth. "Real estate is not a sustainable sector in the long run, it is a very important supporting sector enabler. However, historically, it has never been a driver of the economy in the long run."
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. There are a lot of new developments predicted for the year ahead. However, the problem is in maintaining market competitiveness, amid all the price hikes that don't seem to be slowing down. The value of real estate transactions are up almost 53% and there is a need for stabilisation to benefit the economy. We will be sure to monitor new regulations that help curb price hikes as well as expert analyses on threats to the sector.