Dubai is likely to witness fresh supply of nearly 36,000 new residential units in the next three years, accrording to CB Richard Ellis (CBRE).
However, new research put out by a top consultancy shows that this is unlikely to slow the steady rent and sale price rise that the emirate is experiencing on the back of strong economic recovery.
“We expect around 36,000 new residential units (apartments and villas) could enter the market during the period 2013 to 2015 provided that construction delays are minimal,” reckons Matthew Green, Head of Research & Consultancy UAE, CBRE Middle East.
The majority of upcoming residential supply is expected from secondary locations in Dubailand’s sub-developments of Motor City, Dubai Sports City, Liwan and Dubailand Residences.
CBRE says Dubai’s residential supply witnessed a compound average growth rate of around eight per cent, with apartments increasing by nine per cent and villas by four per cent.
However, the consultancy’s supply figures are far less than what have been stated previously by other constultants. In short, the stats refer to only 12,000 new units per year on average, as against others estimating 20,000 to 25,000 new units per year.
UBS, the biggest Swiss bank, said last year it estimated housing supply by 2011-end to be roughly 360,000 with oversupply potentially at 150,000 residential units.
Asteco, a real estate consultancy, in its first half 2012 report, said it expected 23,000 new units to be delivered this year alone in Dubai. The overall market, it said, consisted of 402,800 apartments and 58,300 villas.
Real Estate Regulatory Agency (Rera) CEO Marwan bin Ghalitha said earlier this year that the emirate was to receive 16,000 new residential units in 2012.
Citibank has said that rapid population growth in the UAE had led to a relative tightening in the housing market before 2009 with demand outpacing supply.
It pointed out that the situation was changing, stating the situation has begun to reverse since the past two years: a slowdown in completions and a rise in population growth is reducing vacancy rates, a trend which it expects will continue.
Bank of America Merrill Lynch has said Dubai’s active population will grow by 6.1 per cent on average over the next eight years, faster than residential supply, which is set to grow by 4.9 per cent over the next two years.
As of December 10, 2012, Dubai Statistics Centre puts population of the emirate at 2.09 million.
Dubai’s government’s bond prospectus posted on the London Stock Exchange in 2011 revealed that the emirate had witnessed completion of 129 projects since 2009 with 237 out of 450 projects likely to be completed in due course.
The emirate’s “safe haven” status has also helped in the market’s revival with establised developers launching new projects mostly in their sought-after developments.
This year, Emaar Properties and Nakheel have already announced new projects in Downtown Dubai and Palm Jumeirah, respectively. Not to be left behind, a number of private developers have revived their stalled projects under the Dubai Land Department’s Tanmia and Tayseer initiative in Business Bay, Jumeirah Village and Jumeirah Lakes Towers.
On Sunday, Emaar Properties and Dubai Holding, the development partners of Mohammed Bin Rashid City (MBR City), unveiled “Dubai Hills”, the first project in the new multi-billion-dollar development.
On back of these project launches, CBRE’s Green does expect more new launches next year, as supply levels becoming increasingly tight in popular community areas.