Regressive demand in Dubai Property: Another Factor in Demand - Supply chart
The population graph of Dubai illustrates a major elevation in the year 2006 with an accession of more than one million people. Amidst the entire population, roughly half of them are earning an adequate amount requisite to possess a middle-high class apartment in Dubai Property.
On an average a unit sustains 2.5 people that would cater to a need of twenty thousand domestic Dubai Property units by the end of this year.
Nevertheless, the Dubai property market confronted an enormous delay in the edifice of fresh property units. Last year remained feeble in terms of supply of property in Dubai. Only five thousand property units in Dubai were handed in the year 2006 which generates a void of around fifteen thousand property units. Such a scarcity in the real estate sector poses a massive pressure on existing stock of property in Dubai. Rental of property in Dubai have soar high and more people have to compress in the existing stock of property in Dubai. However it shows a vast fortification in demand for property as people still desire to own their own household or relocate to better household in Dubai land.
If we assume similar ascend in population this year, it would mean a demand of 35,000 more property units to support the demand, which would enlarge exponentially each year. But as a delivery of 50,000 household property Dubai units is expected this year, it is likely for the pressure on the property market in Dubai to ease down. Even after some delay in supply, it is anticipated that a state of equilibrium will be reached.
Though here is one key point which seeks attention, the time lag occurring between property supply and inhabitation. A margin of around four to five months percolates due to the transactions and then letting property out on rent. From the choice of property in Dubai and paying premiums to renting it out, everything takes a considerable amount of time.
Also a chunk of Dubai property has been bought as a second home by affluent traders. They are sporadically used by these traders and hence might not rent out. Apart from this, Dubai property is bought by a section of proprietors after paying full cash. Hence they don’t need any rentals to support their mortgage costs.
According to EFG Hermes Report, 139,000 units are expected to be delivered in 2008 leading to an over-supply in the market which will reduce the prices and the Dubai property market will become unstable. The property market in Dubai is in maturity stage and such a giant out stock will over flow the market making it more venerable to a state of correction.
This is an assessment which might prove fallacious if the population continues to soar high at this rate. The increasing population will alleviate the situation and will balance the demand and supply graph for property in Dubai.
On an average a unit sustains 2.5 people that would cater to a need of twenty thousand domestic Dubai Property units by the end of this year.
Nevertheless, the Dubai property market confronted an enormous delay in the edifice of fresh property units. Last year remained feeble in terms of supply of property in Dubai. Only five thousand property units in Dubai were handed in the year 2006 which generates a void of around fifteen thousand property units. Such a scarcity in the real estate sector poses a massive pressure on existing stock of property in Dubai. Rental of property in Dubai have soar high and more people have to compress in the existing stock of property in Dubai. However it shows a vast fortification in demand for property as people still desire to own their own household or relocate to better household in Dubai land.
If we assume similar ascend in population this year, it would mean a demand of 35,000 more property units to support the demand, which would enlarge exponentially each year. But as a delivery of 50,000 household property Dubai units is expected this year, it is likely for the pressure on the property market in Dubai to ease down. Even after some delay in supply, it is anticipated that a state of equilibrium will be reached.
Though here is one key point which seeks attention, the time lag occurring between property supply and inhabitation. A margin of around four to five months percolates due to the transactions and then letting property out on rent. From the choice of property in Dubai and paying premiums to renting it out, everything takes a considerable amount of time.
Also a chunk of Dubai property has been bought as a second home by affluent traders. They are sporadically used by these traders and hence might not rent out. Apart from this, Dubai property is bought by a section of proprietors after paying full cash. Hence they don’t need any rentals to support their mortgage costs.
According to EFG Hermes Report, 139,000 units are expected to be delivered in 2008 leading to an over-supply in the market which will reduce the prices and the Dubai property market will become unstable. The property market in Dubai is in maturity stage and such a giant out stock will over flow the market making it more venerable to a state of correction.
This is an assessment which might prove fallacious if the population continues to soar high at this rate. The increasing population will alleviate the situation and will balance the demand and supply graph for property in Dubai.
posted by Property Reporter at
11:56 PM
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