Rents have been rising over the last few years as a result of high demand from both tenants and property buyers.
According to a senior industry executive, the Dubai property market needs an extra 10–20% supply to reduce the rising rental rates and improve affordability in the city.
“Dubai basically need an additional 10–20% units beyond the current demand due to the city’s growing expense due to rising rents. Since new releases are selling out in a day, there is an undersupply, according to Samana Developers CEO Imran Farooq.
He added, “In under 72 hours, we sold 80% of our supply. Demand is clearly exceeding supply when the largest developer sells out in 3 days while the top developer sells out in just 4 hours. Dubai keeps doing incredibly well, therefore this tendency will continue.”
Due to high demand from both tenants and real estate buyers, rents have been rising gradually over the previous few years.
The supply-demand imbalance is highlighted by the fact that new and smaller developers are able to sell their units in days, while larger developers are selling out their inventories in hours, as reported by Khaleej Times.
With a combined contribution of about 90% of new launches, major local developers like Emaar Properties, Nakheel, Damac Properties, Danube Properties, Samana Developers Binghatti, and Sobha Group have been the main drivers of Dubai’s real estate market.
According to the most recent Property Monitor report from Cavendish Maxwell, around 86,000 off-plan units have been introduced in the first eight months of this year, and an additional 35,000–40,000 are expected to go on sale in the last four months, bringing the total to 126,000 for the entire year.
Over the coming years, it is expected that a large number of new properties will become available, perhaps mitigating the impact of increasing rental and real estate costs. Industry insiders, however, continue to point out the present shortage and forecast that it would take a number of years for supply and demand to equalize.
Imran highlighted the need for market stability and said, “Landlords are not concerned because homes are being rented rapidly at market rates and within a week, they can rent for Dh5,000 more.”
“The market is currently undersupplied, therefore we need to expand supply to make Dubai more affordable. Rent increases must halt.”
Additionally, he made note of the fact that 90% of revenues are attributable to the top 9 developers. “Every developer is working well together. With a 4.5 percent market share, we are ranked seventh. Developers in the mainstream will need to take the initiative more. Every developer is at capacity, so adding more pressure would put money at risk, he continued.
