May 20 2006 |
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UAE: New demand will outstrip supply of housing units
An estimated 25,000 to 30,000 residential units will come into the housing market over the rest of this year as developers start delivering their projects to buyers, data shows, but this will not create any downward pressure on rents or prices, say analysts."All the stock is expected to be absorbed by the market as soon as it comes in. The appetite for housing is still enormous in Dubai and demand will outstrip supply all the way to the end of the year," said Andrew Chambers, managing director of Asteco, the Dubai-based property services company.
Data compiled by Asteco shows that the largest chunks of new housing stock are expected to come from the Jumeirah Beach Residence, Dubai Marina and International City developments.
Slightly smaller numbers are expected to be delivered to buyers at Jumeirah Lake Towers and The Palm Jumeirah.
"This is based on the completion dates provided by the individual developers when the projects were launched," said a senior executive in Asteco's research department.
"The numbers may change if there are any major delivery delays." A lot of inventory has already been delivered at Dubai Marina and International City, with more expected to follow, starting in August.The 25,000 to 30,000 deliveries this year are, however, not even close to the expected demand. Last year alone, Dubai Municipality figures show, about 250,000 new residents moved into the emirate.
This translates into a demand for a minimum of 64,000 homes, taking into consideration that the new residents include family members or that bachelors will share accommodation.
The current demand outstrips supply by a ratio of four to one, estimates Better Homes, also a leading Dubai-based property consultancy.
"There are a lot of projects in the offing; and it is expected that the market will be a lot more competitive.
"The end-consumer should be the winner in all this with developers being put under more pressure to be more qualityfocussed," said Better Homes sales manager Emma Cullen.
A look at the delivery graph for the next three years could provide some relief, as developers have announced massive projects since the property registration law was codified on March 12. Among the master-planned projects, Sama Dubai launched The Lagoons, Dubai Properties announced Culture Village, City of Arabia launched Wadi Residences and Al Manal unveiled Crown City.
Emaar Properties released the last of its Alvorado villas at the Arabian Ranches.
ETA Star opened sales for the Grandeur Residences next to the Taj Exotica Resort & Spa on The Palm Jumeirah.
Relatively smaller projects involving a single structure include Burj Al Alam from the Fortune Group, Regal Tower by Tameer, Peninsula Tower by Tulip and The Skyscraper from Al Attar Properties.
Foreign developers also rolled into Dubai, with India's Sheth Group announcing the Iris Blue tower and Korean company Bando Housing buying land for a multiple-use project.
Rents will, however, continue to increase over the next 18 months, analysts say, until significant portions of this expected inventory come into the emirate's housing market.
"But more competitive offerings will be a natural consequence of greater choice," said Cullen.
Largest rent increase
Residents of one bedroom flats in the Rigga and Muraqqabat areas of Dubai have witnessed the largest average increases in rent in the first quarter of this year compared to the amount they were paying in the first quarter of 2005, data released recently by Asteco shows. An increase of 54.76 percent in Rigga and a similar increase in Muraqqabat took annual rents of one bedroom apartments from an average ofDh42,000 in the first quarter of 2005 to an average of Dh65,000 in the first three months of this year the rent figures compiled by the Dubai based property services company reveal. However these two were the same areas that saw no change in rents in the third quarter of 2005 compared to the first quarter of the same year.
"They (residents) were due for a big one after being spared in ;ast year's September quarter," said Francis D"Melo, an estate agent in Deira.
By Yazad Darasha
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