Dubai`s top private developers believe that a demand-supply balance has been achieved, and prices are at rock-bottom and unlikely to go down any further. The prices are envisaged not to get cheaper in 2020-2021 as supply is getting less, and in 2022, the prices will get much better.
Data by real estate consultancies show that the actual supply is less than projected, while sales jumped substantially in the later part of last year, as properties become more affordable. Data by ValuStrat revealed that a total of 24,613 residential units were confirmed to have been completed in 2019, which represented only 58 per cent of the projected residential supply for 2019.
Atif Rahman, director and partner of Danube Properties, is not worried about oversupply, because he believes that a balance in supply and demand has been achieved; pointing that a progressive economy, bringing in fresh investment, more population and businesses to the country will create further demand. “Every step that the Dubai government is taking, such liberalisation of trade and immigration reforms are moving towards that direction and will create more demand.”
Oversupply contributed to declining capital values in Dubai and has resulted in further price declines in Q4 of 2019.
“For the last 15 years, we always hear about oversupply, but more than half of Dubai was built over the last 15 years and the supply has been consumed” said Abdulla Bin Sulayem, CEO, Seven Tides International.
Abdulla Bin Sulayem, attributed the turnaround in the Dubai property market to the mega-event, which will yield an investment windfall of AED122 billion as well as creating around one million jobs over the same period; this is expected to positively impact the overall property market in the emirate.
However, the lasting legacy of the upcoming Expo 2021 when measured against Dubai’s property market, will only be truly realised when international visitors return to Dubai, to invest, live and work here over the medium to long-term.
According to Chris Hobden, despite the challenging environment for landlords, due to falling rents, Dubai is still seen as providing decent yields in the long-term rental market, with the 10 most popular communities offering returns of between 6-9.5%. To put this in context, -prime rental yields in major global cities such as London or Hong Kong, are currently below 5%.