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Rising from the sands to become a world-class city, what seemed to be a mirage is now home to fascinating developments. Dubai is thriving, having grown rapidly over the past two decades as a result of extensive economic development and planning. The resultant surge in population growth has been absorbed and sustained by the array of projects delivered across new Dubai over this period.
However, with a change in levels of population growth and stringent regulations surrounding the availability of finance, there is uncertainty surrounding the feasibility of the development supply pipeline due for launch and delivery across the region ahead of the World Expo 2020. Given the abundance of supply as well as the change in factors that generally determine end user and investor decisions, we are yet to see where the future residential communities are likely to be established and where the surplus will lie.
More than 23,000 residential units are expected to enter the market this year and already 30-plus off-plan launches have been recorded, which will translate into more than 10,000 units to be delivered over the next three years. This is in addition to more than 40 projects launched in 2014, which are planned to be delivered over the same period. A large number of the projects launched this year fall within the low to middle price range and a smaller component comprises high-end and luxury accommodation. This is a contrast to 2014 when a large proportion of projects launched fell within the middle to high-end bracket.
Regulations related to gearing imposed by the Central Bank have had an impact on affordability, leading to increased demand for affordable housing. This is particularly apparent in the influx of first-time homebuyers and investors in the primary market, where flexible payment plans — some extended beyond completion — are on offer. This demand has been accommodated in the southern and southeastern outskirts of Dubai where land is abundant and prices paid by the developer reasonable.
Areas such as Dubai Sports City, Jumeirah Village Circle and Dubailand, all located inland, have traditionally fallen in the mid-market segment and are considered secondary locations with relatively affordable prices. Mag 5 Boulevard in Dubai South as well as several other planned master developments are new additions to this category. Nshama, an efficiently designed development offering a reasonable price range, is also located in the vicinity.
The lower-end average price brackets as well as the flexible payment plans on offer are directly linked to the affordability levels of low- to mid-income earners and a new antecedent leading to growth in the south. The Al Maktoum International Airport at Dubai South and the proposed Expo 2020 site will have a significant impact on the surrounding locations. This along with the proposed extension of the Dubai Metro by 15km — with seven new stations leading to the Expo 2020 site — signifies a major growth corridor.
However, the affluent and opulent have not all left Dubai and demand for luxury accommodation is still prevalent. A multitude of middle- to high-end developments have been planned, mainly in prime locations around Downtown Dubai and the Burj Khalifa.
Mohammad Bin Rashid City — District One in particular is perhaps the most significant high-end development in the works, indicating expected growth and development. Meydan One, featuring the world’s tallest residential tower, has recently been announced.
The Opera District in Downtown Dubai has been launched in several phases, with each being absorbed instantly by the market. This has been a common occurrence with most developments in the area. However, the district is reaching saturation, and its boundaries are likely to expand, which is already evident.
For example, located northeast is the Dubai Creek Harbour, a large-scale master development planned to cater to demand for middle-to high-end accommodation in proximity to Downtown. The Dubai Water Canal running from Business Bay to Jumeirah should lead to the merger of the two areas. Perhaps we are leaning towards the renaissance of old Dubai through the injection of new developments that would rejuvenate the area.
A notable development and growth pocket between Jumeirah and Downtown is City Walk by Meraas, planned to be delivered in three phases and partially complete. Its location (off Al Wasl Road and close to Downtown) is attractive to high-end buyers. Upon completion the mixed-use development is likely to become a hub for the nouveau riche, impact growth and in some parts lead to gentrification of its surrounding locations.
In addition to economic aspects, speculation and political factors play a major role in Dubai’s growth prospects. While we have witnessed the success of new Dubai, we are yet to see an ample development pipeline.
However, what is apparent is that the emirate’s landscape is growing in several directions. Like most established cities, there is an increasing divide between affluent settlements and the urban sprawl of the relatively less privileged. Of course, enthusiasts for the likes of the ultra-luxe Floating Sea Horse Villas fall into a completely different category.
Source: Sofia Underabi, Head of Residential Valuation at Cavendish Maxwell, Special to Property Weekly
Al Nisr Publishing accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided.