The residential market in Dubai could experience a shortfall in the long run, as there would a development boom needed for keeping up with a projected growth in its population.
Knight Frank, the real estate consultancy, forecast that there will be a demand for human resources. This will be due to external factors, such as the Dubai Economic Agenda ‘D33’ that was announced recently.
The roadmap that the agenda highlights shows that by 2023, Dubai is expected to double its GDP.
The current population of Dubai stands at 3.5 million, but by 2023, it is expected to increase to six million.
In addition, this number is expected to reach 7.8 million a few years later, thanks to the Dubai Urban Master Plan 2040.
The Head of Research and Partner for Knight Frank, Faisal Durrani, said that a residential development boom on a large-scale would be needed for keeping up with the growth in the inhabitants of the emirate.
He added that if the population rises as predicted, then the current housing stock in Dubai would have to double.
He said that there were already signs indicating that the long-term would see a shortage in the number of homes in the city.
The GDP of Dubai is the first sign, which Durrani said, had recorded a rise of 2.8% in the 12 months that ended in the first quarter of the year.
The dominating sectors were hospitality, aviation, trade and retail and the first half saw Dubai have the highest average hotel occupancy levels.
Almost 78% of the hotel rooms across the emirate were occupied, which is almost 150,000 rooms. The next sign is the non-oil sector PMI of the emirate.
This has been seeing an expansion for the past two and a half years. As businesses continue to recruit and expand, it has led to a supply crunch for Grade A offices.
Experts have said that prime neighborhoods in the emirate have seen tight supply, but there is expansion in the construction of new homes in other areas of Dubai.
Knight Frank has said that the total number of homes that will be delivered by the end of 2028 is around 85,200 and about 59,000 or 69% of the units will be apartments.
In addition, there are also 40,000 homes that are expected to be complete by the end of this year, but there is a portion that could be delayed until next year.
If all 40,000 homes are delivered in 2023, then 42,500 units are scheduled for completion in the next four years, which is about 8,500 homes in a year.
This would be a decline of 72% in the rate of home deliveries in the long-term. According to industry experts, this momentum also shows that prices would also continue to face upward pressure.
It is more likely to happen if the population does increase, as has been predicted, which would push up demand for more homes.