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Discuss this article (26 Comments)Dubai faces homes surplus of 30,600 by year-end
by This email address is being protected from spam bots, you need Javascript enabled to view it on Thursday, 13 August 2009
SURPLUS PREDICTION: A new JP Morgan report says Dubai could have a homes surplus of more than 30,000 units by the end of 2009. (Getty Images)
Dubai is set to have a surplus of up to 31,000 residential units mainly due to the decline in the expat population by the end of the year, according to a new report by JP Morgan.
The investment bank's study into real estate in the Middle East and North Africa region said despite a recent small pickup in transaction volumes, supply overhang in the Dubai property market would reach 28,500 units by end 2009 due to the modest economic forecast and negative population growth estimates.
"Our demand supply balance is based on the difference between cumulative supply of 253,000 available by end 2008 and required units derived using average household size of 5.8 per unit and potential repossessions from mortgage defaults.
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"This takes our cumulative residential supply overhang to 30,600 by end 2009, though most of the overhang is attributable to fresh supply and incremental supply from repossessed units only accounts for six per cent of the total surplus in 2009, as per our estimates."
Beyond 2009, JP Morgan feels the forecast 3.5 percent population growth for Dubai is unlikely to absorb the upcoming supply of residential units, Emirates Business reported on Thursday, citing the study.
"However, we expect the impact of this overhang will largely be felt by recently supplied and upcoming units in new and outer Dubai area, where the occupancy levels are relatively low making price recovery a slow and painful process."
The report added: "The prospect of negative population growth and slow economic recovery does paint a cautious picture for Dubai's residential market in the near to medium term, where rising demand supply surplus may hamper price recovery."
However, JP Morgan added that due to Dubai's unique status as a liberal, tax-free and business-friendly destination, the banks could not rule out surprise demand recovery from regional investors.
By contrast, the short-term supply of homes in Abu Dhabi remains fairly limited, according to the report.
"We believe that high occupancy levels are unlikely to ease from near 100 per cent any time soon." JP Morgan said.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Why Dubai Real estate is stalled :
Posted by Gaetan, Dubai, UAE on Thursday 20 August 2009 at 17:36 UAE time
Banks , Government and real estate shout themself it the foot. Banks interest rate in UAE is probably the only one in the world witch saw an increrase of interest rates on morgage. About 2.5 time highers then in well established contry. The UAE visa rule of 6 months ?? Why would I be interested to buy 100 % of a property where I may be refused the right to live in it every 6 months ? UAE Banks : opening fees for morgage are free in Canada , 1 to 6 thousand dollards in UAE. Reale estate lost ? They make me laught, they produce nothing, don t take any risk, are absolutly not qualified . What are they doing ? Real estate company place an add on Dubizle, find a owner and a buyer who did invest and will invest, then, they take 5 % commission. Hey, go directly on dubizle and skip the real estate leeches .Real estate companies don t offer much more protection then a web cite. ( I own 4 properties in Dubai, and 2 more witch are dead stop. RERA : I have been there 3 times, made written ( paper and e mail) complain, result : NOTHING, This is why people don t have confidence, there is no confidence to have at all.
Posted by Gaetan, Dubai, UAE on Thursday 20 August 2009 at 17:36 UAE time
Banks , Government and real estate shout themself it the foot. Banks interest rate in UAE is probably the only one in the world witch saw an increrase of interest rates on morgage. About 2.5 time highers then in well established contry. The UAE visa rule of 6 months ?? Why would I be interested to buy 100 % of a property where I may be refused the right to live in it every 6 months ? UAE Banks : opening fees for morgage are free in Canada , 1 to 6 thousand dollards in UAE. Reale estate lost ? They make me laught, they produce nothing, don t take any risk, are absolutly not qualified . What are they doing ? Real estate company place an add on Dubizle, find a owner and a buyer who did invest and will invest, then, they take 5 % commission. Hey, go directly on dubizle and skip the real estate leeches .Real estate companies don t offer much more protection then a web cite. ( I own 4 properties in Dubai, and 2 more witch are dead stop. RERA : I have been there 3 times, made written ( paper and e mail) complain, result : NOTHING, This is why people don t have confidence, there is no confidence to have at all.
We Told You So!
Posted by Dillinger on Tuesday 18 August 2009 at 10:55 UAE time
This is the price you pay for greed and hokey statements about Dubai,I think this country will have to live with it for some time to come. This is not the 80s as someone pointed out, maybe close but still not there, I was born in this wonderful country and have been a resident here for 30 years, this is not the Dubai it once was!
And to Fooboy, hats off, the only smart one in this blog.
Posted by Dillinger on Tuesday 18 August 2009 at 10:55 UAE time
This is the price you pay for greed and hokey statements about Dubai,I think this country will have to live with it for some time to come. This is not the 80s as someone pointed out, maybe close but still not there, I was born in this wonderful country and have been a resident here for 30 years, this is not the Dubai it once was!
And to Fooboy, hats off, the only smart one in this blog.
Dubai homes surplus
Posted by george, Dubai, United Arab Emirates on Saturday 15 August 2009 at 18:05 UAE time
Residential Projects completing by end of 2009 will release a new 35000 units and the forecast of units vacated by expats are around 50000 units based on average of 3 persons per units - making the total availability around 85000 units by end of 2009. this means a requirement of population increase by 250000 or property price drop by 18% in order to have an equilibrium.
Posted by george, Dubai, United Arab Emirates on Saturday 15 August 2009 at 18:05 UAE time
Residential Projects completing by end of 2009 will release a new 35000 units and the forecast of units vacated by expats are around 50000 units based on average of 3 persons per units - making the total availability around 85000 units by end of 2009. this means a requirement of population increase by 250000 or property price drop by 18% in order to have an equilibrium.
dubai s population decline
Posted by vijay, dubai, u.a.e on Saturday 15 August 2009 at 09:03 UAE time
the locals like omar and mounir should realise if they are educated enough and experienced that the rise of dubai was due to the international buisness s established here.The reexport trade has been the backbone of dubai less expatriates means less t.v s ,washing machines food, textiles and other goods imported and since the hotels and visa expenses have already driven away the small buiness man who used to buy goods for iran india pakistan african and other neighbouring countries,The less the goods imported as per rules of the economies of scale the goods will ultimately become expensive for the locals like muscat and bahrain mkts and will ultimately hurt the local population.It is in intrest of the locals to let the expatriate population increase as with no population i wonder what the mega malls souqs and hotels will survive as each person resident or tourist is creating 3 to 5 jobs in the service indusrty.The locals and expatriates are interdependent on each other and make Dubai a wonderful city like it was before the era of the super greedy landlords and hungry govt depts which have bankrupted the small buisnesses and tourist industry.
Posted by vijay, dubai, u.a.e on Saturday 15 August 2009 at 09:03 UAE time
the locals like omar and mounir should realise if they are educated enough and experienced that the rise of dubai was due to the international buisness s established here.The reexport trade has been the backbone of dubai less expatriates means less t.v s ,washing machines food, textiles and other goods imported and since the hotels and visa expenses have already driven away the small buiness man who used to buy goods for iran india pakistan african and other neighbouring countries,The less the goods imported as per rules of the economies of scale the goods will ultimately become expensive for the locals like muscat and bahrain mkts and will ultimately hurt the local population.It is in intrest of the locals to let the expatriate population increase as with no population i wonder what the mega malls souqs and hotels will survive as each person resident or tourist is creating 3 to 5 jobs in the service indusrty.The locals and expatriates are interdependent on each other and make Dubai a wonderful city like it was before the era of the super greedy landlords and hungry govt depts which have bankrupted the small buisnesses and tourist industry.
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