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The long-awaited narrowing of the gap between residential supply and demand has a due date: 2016.
Around 30,000 homes will come online within the next two years, giving Dubai residents a breather when it comes to choice and, hopefully, a return to relative affordability. Internally commissioned research shows that this is the number of units needed to match supply with demand, which equates to 24,000 apartments and between 6,000 and 9,000 villas.
These units are forecast to be ready for rental at the end of 2016, and while this may feel like an interminable wait for many frustrated tenants, it will also provide the much-needed stock in the run-up to Expo 2020.
While a final tally of the required units for this game-changing six-month festival is yet unknown, the specter of rampant vacancy levels due to a surfeit of oversupply post-Expo is nothing more than a myth.
If we look back at Dubai's rental trends, even during the global financial crisis, the market didn't register a crash in vacancy levels for residential accommodation, just a dramatic decline in rental rates.
There were no ghost town scenarios or empty buildings in our portfolio of around 12,500 units and 370 buildings, and we maintained our vacancy levels throughout this period.
Fast forward to 2014 and we were seeing occupancies rise as more new residents enter the market, so the addition of new apartment units and villas will more likely to have a moderating effect on future price increases rather than fuel an oversupply situation.
Our data also shows that the stabilization of both rental rates and sales prices is ongoing but this doesn't mean that prospective tenants will be able to bag a bargain in their preferred location or building.
Rent increases will continue for very specific developments and specific products in line with demand and are contingent on the type of ownership structure.
For example, if you are eager to relocate to the Dubai International Financial Centre area, then you are going to pay significantly more due to limited supply. The same applies for people looking to enjoy the Palm Jumeirah lifestyle and who have their eye on developments such as Oceana.
On the other hand, if you are after a three or four-bedroom villa, in the next two years, we will see more choices come on stream.
It is also worth remembering that the freehold market has an impact when it comes to price fluctuations because individual landlords obviously want to protect their property rental investments and will accordingly structure what they expect to achieve as an annual rental figure.
In addition, our research shows that Dubai's prime residential areas are among the most affordable when compared to other global hotspots.
Rental rates in prime locations averaged around Dh115,000, Dh160,000 and Dh235,000 for one, two and three-bedroom apartments, respectively, and as 2014 came to a close, Dubai's rents are currently the fastest-growing in the world.
Pop across to London and you'll look at Dh195,000, Dh340,000 and Dh493,000, respectively, and eye-watering Dh346,000, Dh500,000 and Dh654,000 in Hong Kong for a property of the same size.
The Cityscape Global event held last year provided a good yardstick for market measurement and with investors holding onto the purse strings in anticipation of new high-profile launches and off-plan announcements.
A final point to consider for investors with grander aspirations is the demand for lower value land plots. If you are in the market for a ground plus four or five-approved plots, then these can be purchased and developed at fairly reasonable costs, but first, mover advantage is key.
Get to know Plan 2021 and its impact on Dubai realty
Source: John Stevens, Special to Freehold
The writer is Managing Director - Asteco