Demand and Supply Issue in Dubai Property

Dubai Property, the shining star of Dubai’s golden fortunes, has still no signs of slowing down, contrary to property analyst’s predictions. The breakneck speed with which Dubai property arrived in the international property market scene is well known by now. The allure of success of Dubai property is impossible to deny. The Dubai property setting speaks of boundless infrastructural accomplishments which have provided Dubai with a distinctive landscape. The tax-free lifestyle, exotic beaches, high end luxury living, booming economy of the brandishing city of Dubai has captivated investors towards Dubai property time and again. Keeping in mind such facts about Dubai property, it is also essential to note the high tempo with which demand is rising. The acid test for Dubai property is to sustain supply in the face of such extreme demand. The demand and supply ratio is a matter of great concern for Dubai property builders and agents.

One of the forecasts made by property experts regarding Dubai property is that the shortage of supply to the demand will be detrimental to the bustling Dubai property. This has sparked off a debate with another section of property experts reigning in the view that the supply of Dubai property will exceed the demand in the coming months. Investment bank EFG Hermes did a commendable job by conducting a research which highlighted the true position of upcoming supply of the Dubai property market. In its report it has listed all the projects of Dubai property to be completed in 2007 and 2008, but most have them have been subject to delays. It also made the observartion that Dubai property ensured a demand for 40,000 to 50,000 residential units per annum. This report has not taken into consideration the fact that out of this demand, only 30 % is in the luxury sector and Dubai property comprises mostly of such luxury projects. This may suggest that Dubai property is on an overbuilding spree. Pent-up demand and selling units as second homes may be the saving grace for a time for the demand and supply issue of Dubai property.

If we assume that Dubai population will continue to grow at the same rate in 2008 as in 2007, then the total demand for property would come to 35,000 units. This number is definitely not very far from the 50,000 units that property analysts have predicted will be delivered by this year. Now, if we take into consideration come delays then we may optimistically hope for the total demand and supply of Dubai property to be in equilibrium. So a situation where supply exceeds demand may not be seen on the horizons of Dubai property. The demand and supply chart has also made the Dubai property market more stable in the sense that Dubai property tariffs have been escalating at lower rates as compared to a few years back.

The real estate builders have become smarter now and are not as candid in selling property as before. We now see a more mature Dubai property market. One of the instances is that builders actually wait for the completion of a city to discern the exact worth of the property and also the maximum turnover it will provide. Thus the demand for Dubai property is still hot, so much so that it is letting out steam.