11% of Dubai homes now vacant and supply still rising
Posted on 09 June 2010 with no comments from readers
Property data in Dubai has now become sufficiently transparent to allow a more or less accurate assessment of the residential property vacancy rate, that is to say units available for rent plus units up for sale. The present figure is 11 per cent and rising.
Go to the real estate listings website www.propertyfinder.ae and the truth is only too clear. There are 20,130 properties listed for sale and 11,797 for rent in Dubai. That makes a total of almost 32,000 or around 11 per cent of the estimated 300,000-unit housing stock.
Data source
Now it is true that www.propertyfinder.ae contains perhaps 20-30 per cent multiple listings of the same property. But then this is not a fully comprehensive service and likely misses at least this number of property listings, so it is not a bad indicative figure.
Going forward this vacancy rate will rise as new property comes on to the market, and Dubai has a string of building completions pending as long as your arm. Estimates for upcoming residential supply vary wildly from 30,000 for the rest of 2010 and then 20,000 more for 2012, to a more conservative less than 10,000 more units this year and the same next year.
That places the estimated vacancy rate for residential property in Dubai at 17-26 per cent by the end of next year, assuming the net demand for real estate remains unchanged. The latter seems a reasonable assumption as growth sectors like airlines and hospitality will likely only offset consolidation elsewhere, unless something unexpected happens to improve the global economy.
Extra supply
Moreover, the upcoming supply figures only capture buildings that are close to completion, and not those that are being held back by the government in an attempt to manage supply. This means that a market recovery will take longer than the present figures suggest as the true number of units to be absorbed is bigger, although how much bigger is impossible to say.
The impact on residential selling prices and local rentals is clearly not going to be positive. The Reidin.com website that uses sales data from the Dubai Lands Department shows a three per cent fall in apartment prices in April compared with March 2009, and an increase of three per cent for villas over the same period.
Villas are in much shorter supply than apartments and thus should withstand the oversupply impact on pricing rather better than apartments, although there is always a contagion effect.
