Dubai Faces Rental Surge as Demand Outpaces Supply; Experts Call for 10-20% Increase in Housing Units
In a rapidly evolving real estate landscape, Dubai is grappling with a significant rental surge driven by soaring demand from property buyers and tenants.
Industry experts indicate that the city requires an additional 10-20% in housing supply to alleviate escalating rental prices and enhance affordability.
Imran Farooq, CEO of Samana Developers, emphasized the urgency of addressing this issue, stating,
“Dubai essentially needs an extra 10-20% more units than the current demand because the rising rents are making it increasingly expensive. There is an undersupply, as new launches are being sold out within a day.”
Farooq’s remarks come in the wake of a notable trend where leading developers have seen their inventories sell out in mere hours.
“We sold 80% of our stock in 72 hours. When the top developer sells out in just four hours and the seventh largest does so in three days, it shows the demand is significantly outpacing supply,”
he added.
Major developers such as Emaar Properties, Nakheel, Damac Properties, and Danube Properties have been instrumental in shaping the current market dynamics, collectively accounting for about 90% of new property launches. This year alone, nearly 86,000 off-plan units were launched within the first eight months, with an estimated 35,000-40,000 more set to enter the market in the last quarter, pushing the total to approximately 126,000 for the year, as per a Property Monitor report released by Cavendish Maxwell.
While the influx of new properties is expected to help stabilize the rental and property prices over the coming years, experts caution that the current supply deficit remains a pressing concern.
“Landlords are not concerned because properties are being rented quickly at market rates, and within a week, they can rent for Dh5,000 more,”
Farooq explained, underscoring the need for market stability.
He urged that to enhance affordability in Dubai, it is imperative to increase supply, noting,
“The rise in rents needs to stop.”
Farooq also highlighted the concentrated market power of the top nine developers, who account for 90% of sales, suggesting that more mainstream developers must increase their contributions to meet rising demand.
“All developers are at full capacity, and putting more pressure becomes a financial risk,”
he cautioned.
As the Dubai property market continues to thrive, stakeholders are closely monitoring the balance between supply and demand, aiming to create a more sustainable and affordable living environment for residents.
News Source: Khaleej Times