800 new residents setting up home in Dubai every day

House rents in Dubai, the single largest worry among the majority of the emirate's 1.3 million residents, will continue to appreciate in the coming years due to the influx of a whopping 292,000 new entrants - employees and residents every year, officials said yesterday.
Although the market showed signs of softening in recent past, the issuance of more than 800 work and residence visas per day will continue to push the demand upwards, they say.
At this rate, the population of Dubai is to grow at 22.46 per cent, doubling in about four years. The 44,000 new housing supplies in the UAE this year would be inadequate compared to the requirements.

While this might be a good news for investors, developers and landlords, it may not go down well with tenants who are struggling to make both ends meet, making life in Dubai dearer. Abu Dhabi scheme "Some apartment prices in the UAE have already settled in 2007 with a downward adjustment of close to 10 per cent. However, with increasing interest in Dubai as a business location, with inflation remaining high and interests rates remaining low for the foreseeable future coupled with an increase in mortgage business, we believe there is still a strong outlook for positive growth in the medium and long-term," Shahid Umerani of JAJ Consulting, told members of Dubai Quality Group yesterday. The indications come as an alarm bell to Dubai's marginalised middle income group, many of whom are either sending families back home or gradually moving to neighbouring emirates. This will also put pressures on companies' bottomlines as demand for salary hike is going to intensify in the coming months.
The rent cap has failed to make a dent in the alarming situation. Sensing this, Abu Dhabi yesterday announced a new housing scheme for bachelors with a capacity of up to 110,000 people, reflecting a shift in future demographics.

However, there could be ray of light at the end of the tunnel. "Rents would likely have to come down in the near term as they were getting out of reach of the majority of Dubai residents," the panel concluded. But the core property market still had room for healthy growth over the next few years, with no need for a major correction, they said. Key figures 292,000 new residents are entering Dubai every year22.46% is the rate of population growth in Dubai if this influx is taken into account 44,000 new housing units in the UAE this year would be inadequate to meet the demand.

Source: GulfNews

Dubai rents could fall in ’08

Dubai’s residential rents, which have been on a relentless rally over the past five years, will start declining next year for the first time in a decade as more than 60,000 new housing units come into the market, analysts said.

The rate of increase of rents has already begun to slow. According to EFG-Hermes, Egypt’s largest investment bank, the decline in the pace of rental rate growth observed in the first eight months of this year will sustain into early 2008.

Residential rents across Dubai increased on an average by 16 per cent in the first eight months of this year compared to 30 per cent for the whole of 2006. This trend of slowing rental rate increases, according to analysts, is mainly due to a relief from Dubai’s seven per cent rent cap.
Predicting that the rent cap for 2008 will most likely be reduced to five per cent, an analyst at EFG-Hermes said the decline in the pace of rental rate growth observed in the first eight months of this year, therefore, expected to continue into early 2008, with rents starting to decline in 2008 as new housing comes onto the market.

Revising the bank’s housing unit supply forecast for the next three to four years, the analyst, Sana Kapadia, said due to a far slower pace of project handovers, only 11,000 units or 20 per cent of the expected 57,000 units are coming onstream in 2007 — meaning that supply continues to lag behind demand.

But in 2008, the supply will surge to 64,000 units, and 68,000 in 2009. “Based on the assumption that the population of Dubai will rise to almost 1.9 million by 2010, up from 1.4 million currently, demand now calls for 45,000 to 50,000 new units per annum.”
This means, by end- 2008, supply will outpace the demand.
EFG-Hermes also predicted that a fall in residential property prices, expected to happen in 2008, will now be delayed until 2009. “Supply in the residential property market is and will continue to be constrained in 2007. We predict that the peak year for supply will now be 2009. The market is unlikely to see a price decline before this occurs,” the analyst said.
According to market analysts, rents for luxury housing will fall at a faster pace as end-user demand for mid-income housing is higher than that for luxury housing, which has dominated delivered supply to date.

On the other hand, in the commercial property segment, rents and prices will continue to rise due to capacity limitations. “As Dubai continues to attract businesses from across the globe, we have seen continued pressure in terms of both rents and selling prices of commercial property over the past eight months. “Vacancy rates of around one per cent, in addition to pent-up demand from existing businesses and new tenants wishing to upgrade office premises has allowed rents to rise 40 per cent year to date on average. Prices for freehold office space have risen 17 per cent year to date.“This trend of a sustained increase both in terms of rents and selling prices stems from a prolonged lag in the completion of new commercial supply.”The analyst said with most of the commercial space additions expected to hit the market in 2008 and 2009, she expects to see a marked decline in rents. “As a result, we expect to see Dubai commercial property yields sliding back gradually toward the international average.”

Source: KhaleejTimes

The Soaring Residential Freehold Property Market

In Dubai, the unprecedented influx of expatriate residents has proved the most si gnificant driver of demand for freehold housing. Annual population growth has hovered around an average of 10°/o for the last five years, and with a suggested 882,000 new jobs likely to be created under the Dubai Strategic Plan 2015, there is little chance of this growth rate slacking - estimates point to a total population of 1.9 million by 2010.

This huge demand has consistently outpaced the speed at which new residential properties have been completed. This has kept prices high, and given forei gn investors a major incentive to invest not just in property from Dubai's primary developers - Nakheel, Emaar and Dubai Properties – but also to undertake their own developments.

Estimates from EFG Hermes suggest that demand for residential units is in the range of 40,000-50,000 per year, with an increase of 270,000, to 530,000, by 2010. Yet with such a large number of units coming onto the market at any given time, and with so many different locations, types and styles of property, successful investment remains a challenge. You need the right information to choose between competing projects - information that has been carefully analyzed and projected well into the future to avoid nasty surprises - as well as access to properties that have been carefully scrutinized prior to sale.

Source: LandMark

Dubai property price boom draws towards an end

Dubai has a demand for 40,000-50,000 residential units per year, with 69,000 units to be delivered in 2007, said EFG Hermes' 2006 forecast, a figure revised this autumn to 25,000.

More alarmingly the 2006 report said that in 2008 some 139,000 units were due to be handed over, although delivery dates next year were even more likely to slip than in 2007, as only 14 per cent of these units will be completed by large developers, compared with 75 per cent in 2007. The landmark EFG Hermes' 2006 report looking at property in the region found that a period of stability in 2007 would be followed by a cumulative 25-30 per cent fall in values by 2010, albeit the range of potential price decline outcomes is very wide. The major caveat is that this analysis is predicated on there not being any significant slowdown in the economy which would weaken the flow of expatriates into Dubai. So if oil prices came unstuck in the forecast period, the outlook would be very different.

Developer optimism

When the report came out, local property developers generally took no notice, but there was a slowdown in new schemes, particularly after the massive final rush of new projects at last year's Cityscape trade show. One thing that certainly kept the property boom alive into 2007 was the continual delays to major projects, such as the Jumeirah Beach Residence and The Palm, Jumeriah. In practice, it was still hard to find completed accomodation to buy or rent in early 2007. EFG Hermes revised its 2007 completion prediction to 25,000 units in autumn 2007, and saw prices rising moderately until a belated correction in 2009 mainly due to delivery delays. Yet local developers continued to roll out new projects until the summer. There was a change in focus with ultra luxury, high-rise condominiums and high-end villa communities coming to the fore, while commercial property launches in the Business Bay kept on rolling.

Sky high ambitions

It is a notable feature of global property booms that the most ambitious projects usually come late in the cycle, and of course reflect the then very high land values. Another common feature is the building of super tall buildings and Dubai is set to have the world's tallest building, The Burj Dubai. At the time of writing, the market is still booming with participants anticipating a lively autumn once Ramadan is over. No less than five more super-tall buildings, not including the Burj Dubai, are on the drawing board or at the foundation stage. In fact property rentals continued to rise in the summer of 2007 even if capital values seemed to have levelled off since the spike observed in September 2006. The general belief is that after a five year run, the Dubai boom is almost over with modest price rises until a decline in 2009, or at least that is EFG Hermes' view.