Dubai’s Population Grows Faster than Property Supply
The population of Dubai is experiencing a significant increase, primarily driven by a growing demand for property. The residential property sector has been striving to meet the rising need for affordable housing, but it remains insufficient. According to industry leaders, the supply of properties is likely to lag behind the increasing demand into 2024. This is due to the continuous influx of immigrants and the trend of more residents opting to buy homes in the face of increasing rental costs.
The real estate industry in Dubai responded to the city’s growing population by adding 50,000 new homes in 2023, accommodating nearly half of the new residents. As per data from the Dubai Statistics Center, the emirate’s population expanded by over 100,000 in 2023, reaching more than 3.65 million by mid-December, leading to an even greater demand for residential properties in Dubai.
The spike in the number of populations is primarily due to an influx of international workers, professionals, and investors seeking opportunities within the emirate. This has led to a rise in investment returns and the initiation of various types of residence permits. Additionally, Dubai’s captivating 2040 master plan has played an essential role in attracting millions of people from across the globe to the city.
The vast arrival of foreign visitors is also evident in the Dubai Land Department’s data for the first nine months of the year. This data reveals a 33.8% increase in transactions, amounting to 116,116 deals worth Dh429 billion.
Certain areas, such as the villa market, waterfront properties, and well-established Communities in Dubai, have experienced significant development, leaving minimal land for further expansion. These are prime examples of limited areas that have played a role in driving up property prices in recent years. The demand for properties in these markets consistently surpasses the available supply, resulting in price hikes.
Read More: Dubai Property Price Trends In 2024
Lately, there has been a shift in demand trends towards more budget-friendly locations, with buyers seeking cost-effective properties that have the potential for future value appreciation. These areas include Business Bay, The Greens, Jumeirah Village, Dubai Production City, Dubai Silicon Oasis, and Discovery Gardens.
According to a study by ValuStrat, booming economic factors, positive opinions, and the influx of new residents are causing a surge in demand for housing. Tenants are increasingly opting for home ownership instead of dealing with growing rental prices. Furthermore, there is a significant demand for luxury properties. Affordable and middle-range housing are the primary targets for Dubai residents, leading to a potential shortage of these residential units as they enter the market.
Paul Kelly, the operations director at Allsopp & Allsopp, noted that while developers are taking action to address the existing shortage in the market by making 100,000 new off-plan units available for sale in 2023, these properties will not be available for occupancy by end-users until the period between 2025 and 2027. Therefore, the residential property shortage in Dubai is predicted to remain for another two to three years.
Kelly emphasized that with Dubai’s plans to increase its current population of 3.6 million to 7.8 million by 2040, there’s an evident requirement for the continuous development of large-scale residential and commercial properties. This development is essential to meet the demands arising from the projected population growth in the years to come.
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