JLL chief says new plan to address balance between supply and demand is 'welcome news' to Dubai property market
Plans to form a higher committee for Dubai’s real estate planning to enable a healthier balance between supply and demand have been hailed as a "positive step".
Thierry Delvaux, CEO of real estate consultants JLL MENA, said recognition of the current imbalance and the implementation of a plan to counteract this problem are "key steps towards making a change".
One of the major factors contributing to the decline in real estate rents and prices in Dubai over the past few years has been the excess levels of new supply to the market, he said.
Dubai's ruler announced Monday the creation of a panel to address the glut in the property market.
The committee charged with rebalancing the industry will be headed by Sheikh Mohammed bin Rashid Al-Maktoum's son and deputy, Maktoum bin Mohammed, and include representatives of top property developers in Dubai.
As part of this mandate, the committee will develop a comprehensive strategic vision for all major real estate projects in the emirate for the next 10 years.
Delvaux said: “This initiative is welcome news for Dubai’s real estate industry and represents a positive step towards achieving a more balanced market for the emirate. High levels of recent supply are being felt across both the commercial and residential sectors and while not all proposed projects will complete on schedule, we do expect to see a significant spike in project completions across the residential and commercial sectors over the remainder of 2019.”
JLL said the average level of residential completions in Dubai over the past three years has been around 20,000 dwellings per annum, while as many as 60,000 dwellings are scheduled for completion in 2019 alone.
It added that a similar increase in new supply is also being witnessed in the retail sector where completions this year could exceed 600,000 sq m, compared to an average of 233,000 sq m per year over the past three years.
Delvaux said: “The extent to which this new committee can regulate and achieve an improved balance of supply and demand remains to be seen, but recognition of the current imbalance and the implementation of a plan to counteract this problem are key steps towards making a change."
He added: “The ‘build it and they will come’ model has served Dubai well in the past but now is the time to be reviewing this approach and create a more balanced market. Achieving this objective will inevitably require more controls on the level of future supply than have been implemented in the past, but it is an initiative set to improve the country’s long term economy.”
The panel will also guarantee that giant semi-state real estate companies do not compete with private sector developers.