Are you feeling the pinch of growing rents in Dubai? Many citizens and tenants are suffering from the increasing rents of dwellings, in particular in phrases of housing. The Dubai property market requires an extra 10% to 20% supply to address this trouble. This want stems from a massive undersupply of housing rents inside the city. The current demand for properties far exceeds the available supply.
Dubai Property Market Needs Up To 20% Extra Supply To Control Rising Rents
Current Rental Trends In Dubai
In recent years, Dubai’s rental market has experienced a sharp upward trajectory, driven by high demand from both property buyers and renters. This rise in rents has made it challenging for many residents and expatriates to secure affordable housing. One of the critical reasons behind this surge in rental prices is the significant supply-demand imbalance in the real estate market. Both large and small developers are seeing rapid sales of their new developments, often within hours or days of their launch. This quick turnover in property transactions highlights the high demand for real estate in Dubai, with many potential tenants and buyers competing for limited housing options.
Larger developers dominate the market, accounting for approximately 90% of new launches in Dubai’s real estate sector. These developers have played a pivotal role in shaping the property landscape, introducing new projects that cater to a wide range of investors and homeowners. However, the speed at which these properties sell out suggests that the demand is consistently outpacing supply, leading to rising rents and property prices. Smaller developers may not have the same market share as larger entities, but their projects are selling out rapidly, often within just a few days of their launch. This dynamic reinforces the challenge of keeping up with demand, leaving many renters and buyers in fierce competition to secure units.
The rental market in Dubai is particularly tight in prime areas, where properties are in high demand due to their central location, amenities, and proximity to business districts. These factors make it increasingly difficult for renters to find affordable options, especially as landlords seek to maximize returns by raising rental rates in response to heightened demand. Many residents are being forced to reconsider their housing options, looking to move to more affordable areas or negotiating with landlords for more favorable lease terms.
Supply Statistics
Despite the ongoing demand for housing, developers have been working tirelessly to introduce new projects and properties into the market. In the first eight months of the year, nearly 86,000 off-plan units were launched across Dubai. This represents a substantial effort by developers to meet the growing demand for housing. However, even with this significant number of new units, the market remains undersupplied, leaving many buyers and renters struggling to find suitable homes.
Looking ahead, an additional 35,000 to 40,000 units are expected to be introduced to the market during the final four months of the year. This could bring the total number of new units for the year to around 126,000. While this influx of new properties may offer some relief to the market, experts caution that the current supply still falls short of what is needed to stabilize prices and reduce pressure on renters. The city’s rapid population growth, coupled with its appeal to international investors, is expected to continue driving demand, potentially prolonging the supply-demand imbalance.
Also Read: Dubai Real Estate: Property Prices Set To Rise In 2024
Developers’ Capacity
Currently, the top developers in Dubai are fully engaged in meeting the demands of the market. These developers represent about 90% of property sales, indicating that the responsibility for increasing supply lies with them. While they have been doing an excellent job, they are reaching their maximum capacity. Putting additional pressure on them could pose financial risks. Therefore, more developers need to enter the market to alleviate the current supply shortage.
Future Outlook
The influx of new properties anticipated over the next few years is expected to help stabilize rental and property prices. However, experts believe it will take several years for the market to reach a balance between supply and demand. As new developments become available, they may offer some relief to residents who are struggling with high rents. However, until there is enough housing to meet demand, the problem of rising rents will persist.
Arshad Darbar’s Thoughts
Arshad Darbar, a seasoned real estate expert, emphasizes the urgent need for additional housing supply in Dubai to address the ongoing rental crisis. He notes that the current demand for properties far exceeds the available units, leading to rising rents that are becoming increasingly burdensome for residents. Darbar points out that many tenants are struggling to keep up with these costs, and the situation has reached a critical point where immediate action is necessary. He highlights that major developers are selling their units rapidly, indicating strong demand.
However, he stresses that without a significant increase in supply—estimated at 10% to 20%—the market will continue to experience an imbalance. Darbar believes that fostering a more stable rental environment is essential for maintaining the city’s attractiveness as a place to live and work. Moreover, he argues that creating affordable housing options will benefit not only tenants but also the overall economy, as it can lead to a more satisfied and productive population. Darbar urges stakeholders in the real estate sector to collaborate and take proactive steps to increase the housing supply, ensuring that Dubai remains an appealing destination for both residents and investors.
Conclusion
The Dubai property market faces significant challenges as it seeks to keep up with the growing demand for housing. A lack of available units is driving rental prices higher, making it increasingly difficult for residents to find affordable homes. Addressing this issue requires an increase in supply, estimated at 10% to 20% above current levels. Without such measures, the problem of rising rents in Dubai is likely to continue. This issue affects many residents and potential renters, highlighting the need for action in the property market. By increasing the supply of available units, it is possible to create a more balanced and affordable housing market for everyone in Dubai.
