WHAT DOES THE FUTURE HOLD FOR THE DUBAI PROPERTY MARKET?
There are many factors that affect a real estate market which help us provide an estimation of future prices, below I detail some of the causes and the potential future that we can expect in the Dubai market.
Firstly, we need to look at endogenous factors (within the industry) that affect the real estate cycle, two significant endogenous drivers are myopic agents and irrational exuberance. The alternative factor is exogenous influences, such as fluctuations in GDP, interest rates and employment.
Dubai, as a relatively new and unparalleled housing market, is harder to judge but by incorporating the above factors along with the main issue we are facing at present, the supply of property, we can get a good idea of what the future may hold.
In 2019 we are expecting the highest number of units to be handed over than in the previous 10 years which is contributing to a price correction in both sale and rental prices. Along with supply, like the majority of the World, we are still recovering from the 2009 global crisis which led to financial institutions to close and cease lending, unemployment and reductions in salaries.
Dubai responded quickly to the crisis and most developments were paused or delayed but we did not escape the hard economy being experienced throughout the rest of the World.
The result of the delayed developments and exogenous effects has led to this large supply of property which is expected in the next year. To show in figures, please see below:
In 2019 Dubai is expecting 90,080 residential units, 74,911 apartments, 12,414 villas and 2,755 townhouses compared to a total of residential units handed over in 2017 which was 33,403 and 2018, 27,500 residential, which is a large difference.
The majority of units expected are in: Mohammed Bin Rashid City – 6,124 apartments and 2,239 villas Dubai Silicon Oasis – 3,035 apartments Dubai Marina – 3,118 apartments Jumeirah Village Circle – 7,754 apartments Al Furjan – 3,244 apartments Town Square and Akoya – 4,855 apartments Business Bay – 5,069 apartments Downtown – 3,363 apartments
In 2020 the expected supply falls to 61,707 residential properties consisting of 46,317 apartments, 13,872 villas and 1,518 townhouses.
In 2021 the residential property supply is much lower, total residential units 17,654 consisting of 10,944 apartments, 6,677 villas and 33 townhouses.
And in 2022 the supply is even lower, a total of 5,140 properties made up of 2,604 apartments and 2,536.
So what does this mean for the future of the Dubai property market prices?
The supply will cause the market prices to further readjust slightly in some areas of the Emirate over the next few months.
Positives: Dubai has recently been enforcing some amazing initiatives and regulations for residency and company set up to encourage more people to live in the Region and the Emirates still remains taxfree in the residential property market and employment income. 10-year residency visas for Investors are now available with over 6000 already being issued, to name just one.
My opinion: Based on the above I would predict that we will start to see an increase in property prices by mid-2021 which gives the market enough time for demand to catch up with supply. Mid to Long term investors will benefit from purchasing now or over the next year to take advantage of the expected increase of population which has risen consistently in the past 10 years.
If you would like more information on any of the data or information provided in this email or previous emails please do not hesitate to contact me.
Previous blogs can be found at www.lauravadams.com
data from propertymonitor.ae and compiled by Laura Adams
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