Dubai’s residential property market faces a significant supply-demand disparity, with housing supply lagging behind soaring population growth.
The high influx of foreign workers and residents turning to property ownership, driven by rising rentals and investment potential, has further intensified the demand.
Population Impact:
The emirate witnessed a population surge, surpassing 3.65 million by mid-December 2023, primarily due to the attraction of higher investment returns and various residency permits offered to foreign workers, professionals, and investors.
Supply Shortage and Demand Surge:
2023 around 50,000 new residential units were delivered, barely meeting half of the population increase. This led to a surge in demand, as indicated by a substantial rise of 33.8% in property transactions worth Dh429 billion recorded by the Dubai Land Department.
Areas of Demand and Supply Imbalance:
Certain segments like the villa market, waterfront locations, and mature communities witnessing limited land availability have seen a demand-supply mismatch, driving up prices.
The shift in demand from larger homes in prime locations to more affordable areas, such as Discovery Gardens, Dubai Silicon Oasis, and others, reflects the evolving buyer preferences seeking affordability and future investment prospects.
Challenges in Meeting Demand:
Despite efforts to meet demand through new residential projects in emerging suburbs like Dubai South and Jumeirah Village Circle (JVC), the supply gap persists due to challenges in land availability, delayed project deliveries, construction costs, and supply chain disruptions post-COVID-19.
Projection and Future Outlook:
While developers have aimed to release approximately 100,000 new off-plan units for sale in 2023, these properties won’t be available for occupancy until 2025-2027.
Analysts foresee a continued shortage of residential properties for the next 24-36 months, highlighting the inability of current supply initiatives to match the immediate demand surge.
