Is the Dubai real estate market facing an undersupply?

A rising subset of the resident population driving a demand for affordable properties, the new visa rules and the qualifying criteria for retiree visas and, perhaps most significantly, the growth linked to Expo 2020, are only some of the factors creating a boost in demand, within the Dubai real estate market. Supply and demand dynamics, as always, will play a defining role in determining the scale and specifics of this growth. In light of that fact, the results of a recent study, conducted by the UAE-based real estate portal Property Finder, have generated some interest among industry watchers (1).


The research conducted by Property Finder puts the total residential stock in the Dubai market at a little over half a million units. Of these, 413,000 are apartments and 89,833 villas and townhouses. The additional properties that have entered the market in the first three quarters of 2018 have been found to be around 16,000. At one level, these figures certainly reflect the first stirrings of the Expo 2020 effect – as well as that of some of the other influences stimulating the market. For instance, these numbers show a greater supply than 2017 figures. However, the study was also able to ascertain that only 40% of expected supply had become available in the Dubai market over the past five years, which might result in a possible undersupply. This is significant, since apart from the skewing of price points and other metrics that it will cause, it may reflect the fact that the current positives in the market have – so far – not been optimally taken advantage of.

The undersupply being speculated about becomes especially clear, when considering specific property types and the locations most likely to need their plentiful supply. It is estimated that Dubai will host about 25 million visitors, from all corners of the world, who will arrive as attendees at the Expo. These are significant numbers – expected to result in 277,000 new jobs by 2021 – and will be a major influence on the economy as a whole (2). To consider just one specific real estate niche, studio apartments are being anticipated as a segment in high demand. As recently as in 2016, there were apparently only 350 rental listings for studio apartments in While this niche has certainly seen addition to the supply in the two intervening years since, many industry experts feel that it is still considerable undersupplied – especially in locations most likely to drive demand. Premier properties and state of the art homes – with the finest available finishing, amenities, technologies and features – are another segment which is being reported to be under-available in the Dubai real estate market. This is certainly borne out by the avid interest that has been apparent – in several high end offerings and successful launches of quite a few projects – within this niche, in recent times. The diversification of the UAE economy is bringing a burgeoning population of middle class professionals to Dubai, in pursuit of their career. The rising demand for affordable and quality residential properties – especially apartments – because of this influx is yet another segment that requires more available units to address (3). Clearly, despite some conjecture about the opposite, it is possible undersupply – and not an oversupply – that the Dubai real estate industry needs to address.


Given the several strategic, regulatory and economic transformations underway in Dubai, there are several emerging opportunities within the residential real estate market. As government initiatives, an evolving role for the city and emerging business trends all converge into a growth story, even segments that are currently adequately supplied – or even oversupplied – could well need an influx of more units. There are several reasons for the Dubai real estate industry to be excited and optimistic about the direction the markets will take in the next few years. However, for these positives and opportunities to be maximized and optimally utilized, it will be essential that the industry keeps its ear to the ground and new developments address the emerging trends in customer needs.



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