As Developers Will Only Be Able To Deliver 32,500 Units As Opposed To The Estimated 38,000 Units Planned For This Year. The Apartments And Villas Expected To Experience A Shortage Of At Least 15% Of Residential Units.
Despite a high level of demand, the residential market in Dubai is predicted to witness fewer deliveries this year. As supply, chain problems and increased construction costs are influencing project delivery schedules. Moreover, driving up sales prices, according to a report.
Given that, developers will only be able to produce 32,500 units this year. As opposed to the estimated 38,000 units planned for this year. Apartments and villas expect a scarcity of at least 15% residential units. As per the most recent Core’s Dubai Market Update report, approximately 5,700 residential units delivered in Dubai during the 3Q. Bringing the total number of units delivered in Dubai to 19,000 by 2022.
“This is the first drop in annual estimates since 2016. However, due to favorable market conditions, several developers are speeding up project completion timetables. Moreover, trying to hand over projects earlier than anticipated.
Deliveries of Apartments Predominate
According to The Core’s study, only 22% of deliveries so far this year have been villas. With the majority still taking place in the apartment segment. According to the study, “Villas in master complexes offering a variety of amenities. In addition, a strong feeling of the community remains the major focus for residents. Generating a supply gap and maintaining the upward pressure on villa rents and sales prices.”
Most Units Were Delivered
Mohammed Bin Rashid (MBR) City, Dubailand, Business Bay, Downtown Dubai, and Jumeirah Village Circle had the most handovers. Avencia and Aquilegia in Damac Hills 2, One Park Avenue in Sobha Hartland, Golf Grove in Dubai Hills Estate, and Le Pont in Port de La Mer were a few notable deliveries. MBR City, which includes Dubai Hills, District 1, Sobha Hartland, and Azizi Riveria, is expected to lead supply delivery during the 4Q of 2022, accounting for nearly 54% of all anticipated handovers. Dubailand, Jumeirah Village Circle, World Islands, and Jumeirah Village Triangle will follow MBR City.
Residential supply expects to decrease in 2019, as some projects might experience completion delays. “3,500 villas and 16,000 apartments were completed in the first nine months of this year, according to records. In addition, this accounts for 41% of the total completions scheduled for this year. “As per developer completion plans, a total of just under 48,000 residences will be delivered in 2022. Realistically, it is highly probable that some projects will experience delays of up to 18 months. So the estimated sum may be reduced once the year has ended, the expert said.
In response to a question about whether the supply of residential units is sufficient to accommodate Dubai’s growing population. He said the residential market in Dubai continues to impact negatively by an oversupply of apartments in the E311 and E611 corridors. A situation, as per prediction to last for the near future. “We do think that there are some areas with undersupplied housing, notably in the upscale, prime-location submarket. The homes in Palm Jumeirah, Emirates Hills, Dubai Hills, Jumeirah Bay, Blue Waters Island, and City Walk continue to appreciate because of this, he claimed.
Imran Farooq, chief executive of Samana Developers, also acknowledged that this year’s unusual demand for Dubai properties has resulted in a lower supply of residential units than usual. Dubai needs additional inventory to accommodate incoming visitors and their families to meet demand.
“Supply must keep pace with the growing population to maintain a stable balance of supply and demand. The supply is adequate now, but more inventory must add to accommodate. The forthcoming season, returning residents, and newcomers from all over the world, he said.
According to Ata Shobeiry, chief executive of Zoom Property, there are now more apartments and villas available due to increased interest from buyers and investors. According to him, still, some advancements taking place that will improve the supply. “Dubai forecasted the delivery of 38,000 residential units in 2022. According to him, the districts with the largest expected delivery of these apartments are in 2022. Including MBR City, Downtown Dubai, Dubailand, JVC, Al Jadaf, Dubai Creek Harbour, and Business Bay.
Regarding the shrinking supply of residential units and growing population, He said that this is a somewhat tricky situation. Because a greater supply frequently results in unfavorable circumstances. As the Dubai real estate, market has already seen in the past. However, with the emirate’s growing population, a greater supply is now necessary.
Over 19,000 apartments supplied so far in 2022, according to David Abood, a partner at the real estate consultant Core. Another 13,600 units are going to deliver in the fourth quarter, bringing our 2022 supply forecasts to close to 32,600 units.
“Although these estimates are lower than the 37,000 initial predictions. Due to the favorable market conditions, many developers are expediting their completion deadlines. Also seeking to hand over properties earlier than planned,” he said.
“The annual residential purchases have a range of 35,000 units based on the expected supply for the existing year and the three years prior (2019, 2020, and 2021).
From its present 3.5 million inhabitants, Dubai hopes to serve a population of 5.8 million by the year 2040. To accommodate the additional 2.4 million inhabitants during the following 18 years. Almost 30,000 new residential units need annually (with a typical household unit size of 4.3). We anticipate that overall supply volumes will be equal to demand in the medium term. Because of the current increase in launch volumes and ongoing demand for residential units, according to Abood.
Demand For Real Estate in Dubai
According to Ayman Youssef, vice-president of Coldwell Banker in the UAE, the relaxation of the Covid restriction. Moreover, the announcements of new visa categories have led to an increase in prices across all property segments in the real estate market this year.
“The lack of villas and townhouses continued to raise the segment’s pricing.” Demand for premium serviced homes and sea-facing flats has steadily increased. Although this trend was less pronounced in apartments,” he said.
On the other hand, he claimed, the portion of real estate that was more affordable had a little price increase. Prices for frond villas on Palm Jumeirah increased by 25% and for villas in Dubai Hills by 35% per year.
In response to a query, he stated that 25,854 units are anticipated to be delivered overall this year. Although there is a dearth of villas with beach views. The supply of residential apartments “seems good at the moment,” he said.