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09 December 2023

Dubai can absorb 25,000 housing units a year

By Parag Deulgaonkar

The current pace of population growth in Dubai can absorb on average 25,000 new units per year, indicating there is enough space for new project launches, according to Citi, a leading global bank.

“Vacancy rates in the residential markets peaked in 2010 and have been coming down steadily ever since. What’s more, we believe there is scope for the market to absorb further development given the current rate of population growth (estimated at around seven per cent),” Farouk Soussa, Middle East economist, Citi, said on Sunday in its report on the Dubai property market.

“The market is capable of absorbing on average around 25,000 units a year in future to maintain current vacancy rates.”

The drop in construction activity in the past few years has given Dubai’s economic revival time to reduce significantly the residential supply overhang problem.

“Current levels of construction activity, in other words, are not out of line with market fundamentals. Equally importantly, they are not currently creating the kind of distortions to overall economic growth that occurred in the lead up to 2008,” said Soussa.

Last month, Dubai Investments Chief Executive Officer, Khalid bin Kalban, told Emirates 24|7 that the growth cycle in Dubai's real estate market had just begun and prices were still far below the peak of 2007-2008.

“Prices fell from the peak of 2007 and 2008 by a maximum of 60 per cent and a minimum 40 per cent; we even haven't reached that 40 per cent. Though we have seen increase of up to 20 per cent, we haven't really come back to the value of 2008," he said.

Jones Lang LaSalle (JLL), a global property consultancy, too has said that Dubai’s property market will not witness any correction this year though prices rose “irrationally” in 2013.

“There won't be any correction this year," Craig Plumb, Head of Research, JLL Mena, had said, dismissing concerns that Dubai was experiencing another property bubble.