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The latest report by JLL said that Q3 2016 was a new peak in terms of a new housing supply. 5,400 new homes were completed during this quarter, which is more than during Q4 2012, when developers delivered over 6200 new houses in Dubai.
Most massively new homes emerge on the periphery of Dubai, where there is enough place and land available: these are residential complexes like Wasl Oasis II — a project of 13 buildings in a remote area of Muhaisanah, near Sharjah border. Here 690 new homeowners have recently received their keys to their new apartments.
In the villas segment a clear completion boom is also observed: 400 houses were handed over in the third quarter in the Rahat Villas residential community, which is only the second phase of the huge Mudon project in Dubailand.
And even more completions are expected to flood the market in the fourth quarter of the year: about 11,000 housing units are scheduled for delivery during this period, including 2,500 new villas in the residential complex Akoya by Damac in Dubailand.
Dubai office property stock has also increased by 51,000 square meters in the third quarter, with 64% of newly constructed office buildings belonging to one owner like, for example, The Butterfly and Al Sajwani office centers in Tecom free zone.
Among other trends there are conversions of office premises into residential use, which is also worth noting: such buildings like Le Presidium, Nova and Moon with total floor area collectively standing at about 55,500 square meters can possibly welcome tenants instead of office workers soon.
However, the focus of all major office property completions is still on Business Bay. Silicon Oasis and The Greens are also popular. And, according to JLL, another 152,000 square meters of commercial real estate is expected for completion in the fourth quarter, which is almost three times more than in the third quarter of the current year.
Given this rate of filling the market with ready-made housing, a reasonable question arises: whether it could cause a supply/demand imbalance with an obvious bias towards lower prices? But JLL experts agree with the majority of other market participants, that “with only minimal change reported in prices and rents during Q3, it appears the residential market has now reached the bottom of its current cycle.” The report also warned: “While we expect prices and rents to recover in 2017, the pace of this recovery is expected to be limited by economic uncertainties and the volume of potential supply.”
