Dubai To Add 33,000 New Residential Units By 2011

The total stock of residential units in Dubai is expected to reach 320,000 by the end of 2011, up 33,000 from the current level, while prices are not expected to recover fully before 2011 at the earliest, Jones Lang Lasalle said in its latest real estate market study. “In 2010, a total of 26,000 units are expected to be completed followed by around 25,000 units in 2011, bringing the total residential stock to approximately 320,000 by the end of 2011,” the leading market research company said. With 54 per cent of the expected units in 2010, or 14,000 units, set for completion as at the end of second quarter, the current residential stock in Dubai has reached approximately 287,000. However, the value of residential property transactions in Dubai rose 50 per cent during the second quarter of 2010, compared to the previous quarter, “evidencing improving market conditions,” the report said. While the number of residential transactions also increased by 49 per cent, this was still a 35 per cent slump compared to the year earlier, the report said. The total value also saw a fall by seven per cent compared to the second quarter of 2009, the report added. “Both the number and value of transactions peaked in 2009 second quarter and dipped in third quarter same year, rising once again towards the end of 2009.” However, despite the recent stabilisation in pricing levels, Dubai’s residential market will experience a situation of over-supply and prices are not expected to recover before 2011 at the earliest.

Finance is a key factor in market recovery, the report noted. The mortgage market showed signs of recovery. “With more banks injecting liquidity into the mortgage market the residential market has shown signs of improved lending in 2010,” it said. Most residential projects seem to be on track, with no major additional delays experienced in the secondn quarter of 2010. The report said that unlike the office sector, no major delays or cancellations are foreseen in the residential market over the remainder of 2010. Jones Lang Lasalle said apartment rents were down by four per cent in second quarter compared to the previous quarter and 10 per cent lower than the same 2009 period with the biggest decreases in the high-end sector. Villa rents saw bigger falls, down 23 per cent year-on-year and 11 per cent in the past three months. The report said that although asking prices have marginally declined since the first quarter, achieved prices increased by one per cent to around Dh867 per square feet. The report added that apartment prices had remained stabled whereas villa prices were up marginally over the last quarter.