KHALEEJ TIMES, Wednesday, Feb 5, 2020 | Jamadi Al Thani 11, 1441
Dubai likely to focus new developments in key pockets
Emirates:
There are still pockets in Dubai which can be developed under better
urbanisation plan rather than pushing the boundaries of the city to bring
balance between demand and supply,
"In order to re-establish balance between demand and supply, I would also
encourage not to push the boundaries of the cities. Within the city, there are
pockets where there can be development coming, instead of creating developments
30 km away from Dubai and spread it out. We have got to urbanise the city better
itself. That is where I hope Dubai will create regulations and focus on new
development going forwards," said Thierry Delvaux, CEO for Middle East and
Africa at real estate consultancy JLL.
"There needs to be more regulations how much space can be developed every year
on the market if we want to reestablish this balance between demand and supply,"
he said while speaking on the sidelines of a JLL conference on Tuesday.
Delvaux said despite the reports of slowing economy and poor market, the demand
for real estate is good in Dubai.
"If you ask a player like Emaar, they are very satisfied with the occupancy and
selling rates. If you look at the office market, it is good as well. The only
issue we are facing is that of enormous supply. There is more supply coming on
to this market than most of the key markets in Europe. If we look at the
fundamentals of the market, the demand is very solid. I am very hopeful that
this Higher Real Estate Committee of Dubai is going to better regulate the
market and come up with regulations to slow down the amount of supply and create
a better balance in supply and demand," Delvaux said.
In 2019, 35,000 residential units were delivered in Dubai, the largest number of
deliveries in a year. In 2020, around 63,000 units are expected to be handed
over with materialization rate of 50 per cent. In Abu Dhabi, the numbers of
deliveries were 1,200 in 2019 and this year 900 units are expected to come
online.
ValueStart said in its latest report that January 2020 witnessed fewer off-plan
sales transaction volume, declining 20 per cent when compared to December last
year.
"Similar to 2018, the pace of new project launches eased over 2019 as developers
adopted a more cautious approach in response to lower demand and growing
supply", said John Stevens, managing director of Asteco.
"Whilst the downward trajectory for the short-term is unavoidable due to tepid
economic/market conditions and the expected supply glut, the outlook for the
medium- and long-term for the UAE is encouraging, fuelled by a pro-active
government response and clear focus on economic progress and sustainability,"
said Stevens.
Rentals bottom out
Dana Salbak, head of research for Mena at JLL, sees rentals in Dubai have
bottomed out as the market matures.
"Rents are close to the bottom of the market in 2020 as we expect some level of
stabilisation and normalisation. It is the sign of market maturing and we are
moving away from speculator investors and end-user market," she said.
She noted that a huge supply is coming and that will put further pressure. "I
don't think there will be an uptick in rentals soon.
"Dubai has a supply problem and Abu Dhabi's issue is more of demand. In Abu
Dhabi, supply is controlled but there is a needs to do a bit more to stimulate
demand. In Dubai, 2019 has been a year of record initiatives by the government
to boost demand. There is a lot of happening in the background in terms of works
but these things take time and yes it will have an impact down the line," she
added.
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