Concerns about a massive oversupply of Dubai homes are overstated as a slowdown in construction, a spill-over from Abu Dhabi and other emirates is helping counter the oversupply in Dubai housing, a new study showed on Monday.Egyptian bank HC Securities said in a report that it expects 60,000 additional units by 2011, versus estimates ranging between 90,000 and 140,000.
HC said occupancy levels in Dubai are expected to fall to 70 percent this year before reaching about 78 percent in 2010 and 2011, adding that the estimates include no spill-over from neighbouring emirates.
The pace of construction has “slowed as developers continue to put on hold or delay projects. Also, weakening demand in Dubai has been helped by a significant spill-over from Abu Dhabi, and even Sharjah and Ajamn, driven by relatively attractive rentals.”
The report added: “Also it is important to mention that several Dubai residents who lost their jobs were able to find opportunities in Abu Dhabi, thus maintaining their residence.”
Property consultants told Maktoob Business earlier this week that new real estate projects will likely launch in Dubai in 2012 as prices pick up and bank lending grows.
Billions of dollars worth of projects were launched in Dubai in the last few years to capitalise on the emirate’s property boom, which saw property prices close to double by mid-2008 from the start of 2007.
HC said in its report that property prices in Dubai fell 30 percent from peak to trough. Other banks and property consultancies have said Dubai house and rental prices have fallen more than 50 percent from their 2008 peak.
The report said Dubai’s property market bottomed out in April 2009 and has rebounded by about 9 percent since then.
As Dubai’s housing prices remain attractive, an over-spill from Abu Dhabi is gaining momentum, HC said, adding that it expects a shortage of about 60,000 units in both cities by the end of 2011.
Real estate consultancy Colliers International said earlier this month that one in four homes is vacant in Dubai and a quarter of office space lays empty due to oversupply, adding that additional supply coming onto the market will continue to put pressure on prices.
Colliers said the emirate will have 340,000 residential units by the end of the year, and another 34,300 are expected to come online in the next two years. Meanwhile, leasable commercial space is expected to double to six million square metres by 2011.