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04 December 2023

Rent relief? Dubai likely to get 28,000 new residential units in 2014

By Parag Deulgaonkar

Only 9,700 units were delivered in Dubai in 2013, but nearly 28,000 new units are expected to be completed this year, according to the latest Jones Lang LaSalle (JLL) report.

“At the end of 2013, the total residential stock in areas monitored by us stood at around 365,000 units, with over 9,700 residential units delivered throughout the year,” JLL said in its Q4 report.

In fact, the supply was 26 per cent less than 2012.

The last quarter saw the handing over of around 950 residential units mostly delivered outside Central Dubai and included Whispering Pines villas in Jumeirah Golf Estates, Cappadocia residences and Dana Tower in Jumeirah Village, City Oasis in Silicon Oasis, in addition to a number of buildings and villa compounds in Dubai Sports City.

In 2014, JLL estimates that around 28,000 additional units will be delivered, an increase of approximately 8 per cent over the current stock. However, it clarifies that in reality some of these projects may be delayed beyond their scheduled completion dates.

Dubailand accounts for almost 33 per cent of the announced future supply, with around 16,000 residential units expected before the end of 2016.

Other areas that should see major residential completions are Dubai Marina (4,200 units); Dubai Sports City (3,700 units); IMPZ (3,000 units); Business Bay (2,700 units) and Dubai Silicon Oasis (2,600 units).

Rents and prices

JLL expects rents and prices will continue to increase during 2014, but the rate of growth will decline from the levels witnessed during 2013.

The residential sector ended the year on a very strong note, with both prices and rents on the rise. It got an extra boost from the Dubai’s Expo 2020 win.

The Reidin sale index rose 22 per cent year-on-year (yoy) as of November 2013, with apartments outperforming the villa sector.

The apartment sale price index increased by 25 per cent yoy, but is 6 per cent less than the peak of August 2008.

The villa price index went up by 15 yoy and is 9 per cent below its peak value. Over the year, prices improved the most in Palm Jumeirah, International City and Jumeirah Lakes Towers.

On the leasing front, the Reidin rent index rose by 17 per cent yoy and six per cent quarter-on-quarter with apartments outperforming villas.

The apartment rental index improved by 18 per cent yoy, but remains 14 per cent lower than its record value of Q3 2008, while the villa rental index reached its highest value since the creation of the index in January 2009, rising by 13 per cent yoy.

“The Dubai residential market ended the year with an increase in both rental values and sale prices across almost all areas.

“Success in securing Expo 2020 has further boosted sentiment that is causing rents and prices to increase at unsustainable levels,” JLL said.

“The rapid price growth, return of speculation and the dominance of cash buyers could translate into excessive price growth or over development that, if not managed carefully, could result in a bubble that would be harmful to the Dubai residential sector in the longer term,” the consultancy warned.