Population Growth Dubai’s residential property market grapples with a significant supply-demand imbalance as population growth outpaces available units. The affordable segment is particularly affected, leading to shortages in specific areas of the emirate. Despite the delivery of 50,000 new residential units in 2023, industry experts foresee continued supply challenges, projecting that demand will outstrip supply through 2024.
Population Surge and Housing Demand
Dubai Statistics Center data reveals a population increase of over 100,000 in 2023, surpassing 3.65 million by mid-December. This surge, driven by an influx of foreign workers, professionals, and investors, creates a substantial demand for residential properties in the emirate.
Impact on Prime Locations and Established Communities
Certain segments, including the villa market, waterfront locations, and mature communities with limited land for further development, experience under-supply, fueling price growth. Homeownership trends among tenants seeking alternatives to rising rents contribute to the demand shift.
Changing Demand Dynamics: Population Growth
While larger homes in prime locations initially faced high demand and supply shortages, the trend has shifted to more affordable areas. Locations like Discovery Gardens, Dubai Silicon Oasis, Jumeirah Village, Business Bay, The Greens, and Dubai Production City witness increased demand, driven by buyers seeking lower prices and future investment potential.
Challenges for Developers and Construction Delays
Developers face obstacles meeting demand due to land shortages in central and prime residential communities. Supply chain challenges and rising construction costs, exacerbated by post-COVID-19 dynamics, contribute to delays in project timelines and handovers.
Anticipating Future Supply and Demand: Population Growth
Despite developers releasing 100,000 new off-plan units in 2023, the handover to end-users is expected between 2025-2027. This underscores the anticipation of an undersupply of residential properties in Dubai for the next 24-36 months.
Luxury Property Challenges
Luxury properties, facing the most significant shortage of new units, grapple with a scarcity of available land for large-scale projects in prime locations. Dubai’s 2040 master plan, envisioning a population increase to 7.8 million residents by 2040, emphasizes the ongoing need for large-scale development in both commercial and residential sectors.
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