Credit By: Khaleej Times
Dubai’s real estate market faces a significant obstacle as the city’s population continues to increase faster than its supply of available homes. The disparity between supply and demand has narrowed from luxury to inexpensive categories, creating a challenging situation for the emirate’s real estate market. The discrepancy between the number of newly constructed residential units and the growing population in Dubai has expanded, indicating the possibility of housing shortages across a range of demographic segments as the city sees a significant influx of international visitors and residents who become purchasers.
1. Supply-Demand Disparity:
Industry insiders alert us that there are shortages in both the luxury and inexpensive segments of the Dubai real estate market due to the supply of residential homes falling short of the strong demand. The fact that only around half of the population growth will be satisfied by the 50,000 new residential units projected to be built in 2023 highlights the urgent need for more housing options.
2. Population Growth Driving Demand:
By mid-December 2023, Dubai’s population had grown to almost 3.65 million, with a sharp increase of over 100,000 in just one year. The significant migration of foreign professionals, laborers, and investors—attracted by attractive investment returns and various residency permit options—is responsible for the increased demand for residential properties.
3. Shift in Demand Trends:
Although demand for larger homes in desirable regions spiked in the first half of the year, current patterns point to a shift towards more reasonably priced locales. There is currently more interest in neighborhoods like Discovery Gardens, Dubai Silicon Oasis, Jumeirah Village, Business Bay, The Greens, and Dubai Production City because buyers are looking for reduced pricing and possible future investment appreciation.
4. Challenges in Meeting Demand:
Dubai would need to add 50% more new properties to the market each year to accommodate the current population growth. However, building new homes in high-demand locations is hampered by issues like the scarcity of land in mature residential communities. The housing crisis is worsened by developers releasing new off-plan units, yet their delivery schedules don’t end until 2025 or 2027.
5. Luxury Segment Dominates Shortages:
The most notable scarcity area is the luxury market, where demand has continuously outpaced the supply of newly constructed homes. More ready and available land must be public for large-scale residential projects in Dubai’s prime and affluent districts. Due to land constraints, well-known luxury residential developments like Jumeirah Golf Estates and Arabian Ranches are facing a scarcity.
6. Projections for the Future:
Developers responded to the present shortage by releasing 100,000 more off-plan units in 2023; however, end users are not anticipated to get these units until 2025–2027. As a result, experts in the field estimate that Dubai’s housing scarcity will continue for the next 24 to 36 months, making it challenging to satisfy the growing demand.
The housing crisis brought on by the country’s rapid population increase has put Dubai’s real estate industry in a precarious position. As developers struggle to satisfy the increasing demand, it becomes clear that sustainable solutions are urgently needed. For Dubai’s real estate market to continue and to provide housing for its diverse and expanding population, supply and demand must be balanced.
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