More than 100,000 homes listed for sale or rent in the UAE

Posted on 12 January 2012 with 1 comment from readers

The oversupply of residential property in the UAE has topped 100,000 units listed for rent or sale on the popular Dubizzle.com website.

There are double and treble listings on this website but equally it does not list everything, and so the two probably about cancel out. At the time of writing 27,045 homes were for sale and 78,074 for rent.

Dubai oversupply

Dubai has the most property for sale, 23,518 units and for rent, 53,321 units. Abu Dhabi 17,246 units available for rental, and far less at 2,188 for sale. Sharjah lists 5,930 units for rent. And Ras Al Khaimah 880 units for sale and 567 for rent.

Whatever way you look at it this is a formidable oversupply of property, the legacy of the construction boom that ended suddenly in late 2008, although many projects have been completed since then. You can quibble that some units listed are unfinished or counted twice but the final tally is still huge.

Economic growth returned to the Emirates last year with a record year for oil revenues and a boom in tourism and new residents courtesy of the Arab Spring. This year around four per cent GDP growth is anticipated, still shy of the boom years up until the global financial crisis.

How long will it take to absorb this oversupply of residential property? What will be the impact on rental prices? Will selling prices fall further? Does location make any difference?

Normally such a large supply can only have one effect on prices and that is to push them down. Last year the influx of new residents in the wake of the unexpected Arab Spring unprisings helped to stabilize rents and prices.

Price impact

It does not look as though this will be enough to keep the market stable this year. Location can make a difference with established villa communities, for example, still commanding a premium.

In short it is hard to avoid the conclusion that another supply shock is going to impact the UAE housing market in 2012. There is just so much property of almost every type looking for either a buyer or a tenant. The time for real bargains is coming.

ArabianMoney would agree that Dubizzle.com is not an accurate measure of the housing market but we have watched these numbers climb and climb, and topping 100,000 does look a significant figure.

On the other hand, a contrarian investor might see oversupply approaching its top as a buy signal! The next issue of the ArabianMoney investment newsletter will consider what the best buys might be to beat the oversupply position (subscribe here).