Supply or Demand – What will Dominate Dubai`s Property Market in 2018?

In light of the retreat of rental prices witnessed since Dubai`s real estate market peaked in mid-2014, many observers have uttered concerns in view of developers continually announcing new projects, ostensibly paving the way into substantial oversupply and an aggravated price slump.

With recently revised supply projections and population figures now at hand Property Blog Dubai has taken an in-depth look into the supply and demand dynamics at play in Dubai`s property market from now going forward.

Supply Side: Projections vs Reality
Initial projections based on developers` accounts suggested that a total of 104,912 units would be handed over throughout the years 2017 and 2018 (34,127 and 70,785 respectively) whereas the recently revised data hint at substantial delays in construction, now predicting realization rates of 79% for 2017 and 44% for 2018 (source: REIDIN). Figures of actual handovers in 2017 are not available to date. While REIDIN thus assumes delivery of 31,266 units in 2018, real estate analyst Jones Lang Lassalle expects an even lower figure of 20,000 units to come on stream.

These numbers suggest that the variance between projection and delivery reality might sum up to a whopping gap of 46,530 or more (JLL) units between projected and actual deliveries in just two years, substantially easing the concerns that have been reiterated recently.

Demand Side
Demand in housing units is obviously determined by the evolution in population in combination with the population in relation to occupied housing units. The latter parameter had been measured at 4.5 in 2008 decreasing since to a value of 3.9 in 2016 which suggests that a population of 1m residents now occupy 256,000 units as opposed to 222,000 units in 2008. Although this downward trend had seen a temporary reversal since 2011, it appears highly likely that this parameter will not increase to its former heights, especially in light of the fact that substantially smaller, more affordable units now represent the large majority of units in the supply pipeline.

The detailed article covering migration dynamics and other factors influencing the housing demand side can be found under the following link:

https://www.property-blog-dubai.com/single-post/Dubai-Property-Market-2018-Supply-or-Demand

The author`s blog property-blog-dubai.com covers subjects related to Dubai`s property market and its trends and influences from an institutional investor`s perspective.

The author has been actively engaged in the Dubai property market since 2005 and advises institutional investors pertaining to their overall investment strategy, ongoing asset management as well as the initiation and execution of property transactions.

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Christian Atzert
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Web: www.property-blog-dubai.com
Mail: author@property-blog-dubai.com

This release was published on openPR.