Changing Demand-Supply Dynamics In Dubai Real Estate Market
In a run up to Dubai Expo 2020, there is expected to be a surge in the supply of both commercial and residential properties in Dubai, especially the off-plan launches in the past two years. However, experts have raised concerns on the demand needed to meet the expectations.
In H1’2018, Dubai’s real estate transactions totalled Dh 111 billion as compared to Dh 132 billion worth of sales recorded in the same period last year.
The supply has been higher in the commercial and apartment segments. By the end of 2019, 166,483 units are expected to be completed comprising 18 per cent townhouses or villas, six per cent commercial houses and 76 per cent of apartments. But when it comes to landlords and sellers, their rent and price expectations need to be lowered to meet demand. And many of these projects are also not ready to be handed over by 2020. The popular places for such supply include Dubailand, Jumeirah Village Circle, Downtown Dubai and Business Bay.
But increasing supply is seen to be a good news for households as it lowers down the price of both sale and rental properties, which in return increases the disposable income of residents. This will be beneficial for the residents who have been struggling with the high cost of living in Dubai with value-added-tax (VAT) and increasing school fee.
Without huge demand, the surge in supply is a positive indication that can stimulate Dubai’s real estate sector. After the Expo, a growth in tourism, trade and business will help drive the real estate market forward. With over 20 million visitors expected to come for the Expo, a healthy portion is expected to be staying in Dubai for employment or business. The conventional drivers of the economy such as finance, infrastructure, real estate and tourism are being balanced by advancements in blockchain technology, FinTech and healthcare.
Besides, the set of economic reforms are also driving engines of growth such as Abu Dhabi’s Economic Vision 2030, Happiness Index and Dubai’s Smart City initiative among others. New foreign-owned company rules, 10-year visa legislation, and a start-up entrepreneurial hub positioning are all helping Dubai to align its interests with that of its core real estate sector.