Dubai on housing building spree
Increasing rentals have been weighing down on most UAE residents, but budget conscious tenants may soon have more choices open to them. An additional 17,000 new homes are expected to be delivered this year, primarily in more affordable locations such as Dubai Silicon Oasis, Dubailand and Jumeirah Village Circle. If most of the projected supply does get to the handover stage, it would mean there will be less demand on the existing stock of rental properties in Dubai.
"Over the next four years, roughly 65,000 new units are penned for completion, 83% of these being apartments, and villas and town houses comprising the rest," Matt Green, head of research and consultancy at CBRE, tells Gulf News. This is definitely good news for UAE residents, who have been on the search for new supply in the mid-tier category.
Apartment rents in Dubai are up 29% year-on-year while those for villas have gone up 15%. Taken over a two-year time frame, rentals have put on 45%. "Despite recent regulatory changes, both rentals and sales prices continue to rise, albeit at a marginally slower rate than was recorded during the previous quarter," said Green.
However, now the residential development pipeline is starting to swell with an ever-increasing number of new projects being launched. Recently, Emaar Properties, Dubai Properties and Lootah Real Estate announced that they would be building a total of 845 new homes on the outskirts of Dubai. "The launch of these new off-plan schemes shows that developers still believe there is a market for off-plan properties despite the fact that there is a significant number of existing schemes on the market at the moment," said Craig Plumb, head of research at JLL's Dubai office.
While there is a fear that supply will continue beyond market requirements, experts remain optimistic that Dubai has learnt its lesson from the crash of 2008 and will not repeat its mistakes - whether it be on the part of developers or governmental regulations.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With the Expo 2020 under its wing, Dubai's developers have set out on an expansion plan. For residents, alarmed by rising rents, this is welcome news as it does mean that there will be less pressure on existing supply - something that will help slow down hikes. Most analysts are in agreement that Dubai's heading into a new era - a 'smarter boom' - helped along by the lessons it has learnt in the past.