There has been a shortage of smaller apartment units in some areas of Dubai due to the massive demand brought about by the rise in population and insufficient supply of apartments in those areas.
According to real estate industry executives, there is a shortage in Old Dubai areas, such as Deira and Bur Dubai, because not many new projects have been launched.
This is due to the fact that those localities do not have a lot of development areas left. Hence, they are unable to keep up with the demand amidst the emirate’s fast-growing population.
Last year, the population of Dubai had grown by more than 100,000 and in the past two years, it has grown by 176,000.
This is mainly due to the influx of professionals, foreign expatriate workers and investors into the emirate.
As compared to the population growth, the number of new units that have been delivered in the last few years is significantly less and this has resulted in a shortage in the number of smaller units available.
Asteco, the real estate consultancy, revealed data showing that apartment rentals in old Dubai and affordable areas had also experienced a double-digit increase in the third quarter of 2023.
As compared to the same quarter in 2022, the apartment rentals in these areas had recorded an increase of 23%.
Moreover, there is a higher demand of new units in New Dubai areas because they offer the benefit of owning properties in freehold areas.
This has also enticed developers into launching a greater number of projects in upcoming and new areas of the emirate.
According to industry executives, the New Dubai areas have enough supply for smaller units for keeping up with the growing demand of the population, which is expected to reach 6 million by 2040.
ACE Luxury Property’s chief operating officer, Alan James Gammon, said that there are a number of reasons for the scarcity of smaller units in old Dubai areas.
These include the population growth, a shift in focus on developing high-end real estate developments instead of affordable housing options and a rise in demand for smaller living areas.
According to Gammon, there is a high demand for old established communities in Dubai, especially in Deira and Bur Dubai, where the capacity for new construction is limited.
He stated that the cultural richness of Old Dubai has enhanced its appeal, but the availability of smaller homes is hindered by the scarcity of space.
Consequently, a number of residents of these old areas have to live in shared and sublet apartments because the space is limited.
Gammon added that there is a greater supply of one-bedroom units and studios in New Dubai, as it has expansive land area, contemporary retail and residential projects and luxurious residences.
Residents are attracted to New Dubai because they want to enjoy a modern lifestyle that offers state-of-the-art amenities and infrastructure.
This has resulted in shortage in some of these sought-after areas, but there is a higher price tag associated with the New Dubai lifestyle.