| Dubai Real Estate Industry
/Dubai Residential &
Commercial Market Outlook - 2010 |
| |
| Dubai Residential Market Outlook - 2010: |
|
| |
| Contributory Elements |
- Delays continue to be a major problem
facing the real estate sector.
|
| |
- Dubai has to date witnessed a relatively subdued influx
of completed residential units.
|
| |
- 2006 was widely anticipated to be the first
year to witness the delivery of a sizable number of residential
properties in Dubai. However, the actual handover remained
well below expectations.
|
| |
- Deliveries during 2006 are estimated at 14,000
units against the original expectation of 40,000.
|
| |
- Continue delays & the perpetual exuberant
load on the construction industry resources will have
a long-term impact on the future projects, as there are
not enough resources to address all the intended projects.
This will translate into a shortage of available residential/commercial
units for the foreseeable future.
|
| |
- It is estimated that approximately 125,000
residential units will be delivered from now to the end
of 2009. Considering 30% of the increase
in population as addressable market for the demand side
(30% of 900,000 increase in population = 270,000), the
actual deliveries are more than offset by the increase
in demand. This means that the property market will be
mature & well balanced, with prices increasing gradually
but steady.
|
|
| |
- The property appreciation in Dubai will be on
a constant & steady upward trend well beyond 2010,
with more developed neighborhoods appreciating much more
in value than the undeveloped areas. Significant &
detrimental factors in appreciation shall be the quality
& the maintenance of the properties, which will have
a tremendous impact on the valuation. Another crucial
factor to the construction industry as well as Dubai’s
real estate sector is the Legislation, which is in its
final stage of approval. One is the Condominium Law that
will clarify owner/occupier responsibility for the common
hold land, while Trust (Escrow) Accounts will protect
buyers’ stage payments in independently held accounts.
|
| |
- The Escrow Accounts will require the property developers
to deposit a fixed percentage of the estimated construction
costs in a bank account, which shall be supervised &
monitored by the Land Department. The funds will be released
in stages depending on the status of project completion.
|
| |
- Considering that the majority of Dubai’s property
projects thus far have not been Equity-Driven,
and have generated cash on a Pre-Sale concept,
the Escrow Accounts pre-requisite will squeeze the market
of the developers & reduces their number significantly.
|
| |
- Altogether, Quality, Maintenance, Escrow Accounts
& sever shortages in the Construction
Industry resources will have a significant impact
on the supply side of the property market equation.
|
| |
- Lack of good quality products plus
the absence of a pro-active maintenance
program for the already delivered units, in addition to
the Escrow Accounts will force many developers
out of the market which consequently shrinks the supply
side even further.
|
| |
|
| |
|
| |
|
| |
| |
| |
| |
