Dubai forecast to add 127,000 more homes before 2023
Dubai Government initiatives, including the formation of a new real estate committee to regulate and control future supply, are expected to support the emirate’s residential sector in 2020, according to new research from CBRE.
Its report also reveals that there is a continued push for residential developments to be completed before the start of Expo 2020, which is set to welcome more than 25 million visitors over a six-month period from October 2020 to April 2021.
CBRE also said developers are introducing a number of schemes to further stimulate the market including rent-to-own initiatives, waived completion fees and new residential “co-living” schemes.
Figures from CBRE demonstrate that existing supply at the end of 2019 stood at 608,500 units in the emirate, with an additional 127,000 units expected to be delivered by 2023.
It added that the sales price of an apartment in Dubai at the end of 2019 was between AED480- 1,950 per sq ft, while a villa could be purchased for AED640–2,300 per sq ft.
The positive effects of Expo 2020 on the real estate market are expected to be strongly felt within the hospitality sector, it noted.
CBRE said occupancy levels are anticipated to increase in line with a growth in visitor numbers as a result of Expo 2020. To further stimulate the tourism industry, the Government has decreased municipality fees and licensing fees which has had an immediate uplifting effect on hotel occupancy.
According to CBRE’s Market View, the average occupancy rate in Dubai hotels was 74-76 percent in the second half of 2019, remaining stable from the same period in 2018. Supply stood at 122,180 keys in 2019, with 4,500 keys expected to enter the market by 2023.
According to CBRE, older and smaller secondary retail centres witnessed softer performance figures in the second half of 2019, creating a two-tiered market within the emirate’s retail sector.
It said the growth of e-commerce has prompted retailers to extend sale activity from physical space to online platforms, in line with the global shift in consumer behaviour trends. This in turn has stimulated the logistics and warehousing sectors as retailers increasingly look to e-commerce to boost sales, it added.
In order to further stimulate the sector, CBRE said landlords are also introducing initiatives such as rent-free periods, and capital expenditure to attract anchor tenants.
The retail sector continues to experience a strong source of supply, with 53 million sq ft of GLA in existence in H2 2019 and a further 21 million sq ft expected to enter the market by 2023 according to the report by Arabian Business.
Head of Strategic Advisory at CBRE MENAT, Simon Townsend said: “The year of Expo represents yet another important milestone for Dubai’s real estate sector. There have been concerns around supply in recent years, however a number of promising initiatives such as the new government real estate committee will certainly boost the market sentiment, across all major segments, by regulating supply and promoting collaboration between all key stakeholders in the industry.
“Performance remains soft in sectors such as retail, but the innovative spirit of government, developers and landlords will play a key role in driving growth.”
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