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How is the Dubai residential estate market going to grow?

Published on January 2, 2017 by Dubai Apartment

The first crisis on the Dubai estate market showed us how harmful can uncontrolled growth of the number of new projects and rapid influx of real estate into the market be. When this growth exceeds the actual demand for estate, it results in a “bubble”, which, if exploded, can have dramatic impact on the economy. That’s why at this point, the Dubai residential estate market is strictly regulated, the number (and the quality) of the new projects is thoroughly checked and regulated by the officials, thus the situation where there’s more estate on the market than the purchasers are actually willing to buy is unlikely.

At the same time, the Dubai Land Department hasn’t got a definite annual “agenda” regarding development of new projects, but they have strict requirements and standards for projects that receive approval. What is more, strict requirements for developers and for investment safety practically rule out the possibility for the projects to be freezed and remain unfinished. Based on this data, the analysts estimate a growth of the Dubai residential estate market by around 25 000 new estate objects every year, ranging from studio apartments to luxurious villas. Why did they come up with this particular number?

The Dubai residential estate market as a well-oiled machine

Considering the experience of all the previous shocks and stresses that the Dubai estate market has gone through, nowadays the market’s regulators do their best to provide justified and reasonable number of estate offers with justified and reasonable prices.

25 000 new houses adding up to the Dubai residential estate market every year

According to their calculations, about 25 000 new residential estate objects will help provide accommodation for:

  1. An increasing number of highly skilled workers and specialists, that are constantly being invited to Dubai;
  2. The natural growth of the prosperous population;
  3. Interest of the foreign investors towards the Dubai estate market;
  4. The fraction of workers, who are now forced to live outside Dubai and have to travel to the emirate for work.

And the biggest demand for lodging is among the last category of the chart above – workers in need of inexpensive accommodation. But it’s not rational to aim only at this category of purchasers and tenants, trying to provide all of them with the cheapest lodging possible, as it will result in an overall decrease of prices and increase the risk of the occurrence of another “bubble” in the sector of affordable estate.

On the other hand, limiting the quantity of inexpensive estate objects, aiming solely at the expensive estate is also very risky: the construction and maintenance personnel (even those, who work in development of the projects themselves) will have no place to live.

The Dubai residential estate market is going to grow by 25 000 new objects annually. That’s the estimate for the next several years.

The reserves of the elite estate sector are quite limited: we can’t afford to let another “bubble” occur here, and elite estate itself requires quality infrastructure. Expensive neighborhoods need landscaping, establishments providing various services, roads, maintenance and service personnel. You can’t just build a luxurious neighborhood and expect that all the necessary services and infrastructure for its residents will magically appear there out of nowhere.

For example, 1 luxurious apartment in Dubai requires about 2 other affordable apartments, about 120 meters of roadbed and about 20 square meters of public recreation space. Developing such infrastructure requires sufficient amount of time, funds and manpower.

This is why for now, the resources of the economy allow increasing the Dubai residential estate market by 25 000 estate units annually, both inexpensive and elite.

One thought on “How is the Dubai residential estate market going to grow?

  • on December 29, 2016

    The Dubai residential estate market is going to grow by 25 000 new objects annually. That’s the estimate for the next several years.

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