Real Estate New-builds rebound as Dubai eyes 1m homes by 2030 By Andy Sambidge May 18, 2022 Creative Commons A growing population plus reforms to golden visas has led to huge demand Forecast is four times original estimate 38,000 units expected to be completed this yearDemand for luxury homes is key driver Residential real estate project launches in Dubai increased significantly in early 2022, underpinned by renewed positive market sentiment following years of slowdown. After the impact of Covid-19 and dampened market conditions, recent quarters have seen a sharp up-tick in new project launches with Q1 2022 volumes surpassing pre-pandemic levels, according to new data. Prathyusha Gurrapu, head of research and advisory at real estate consultants CORE, said: “Several noted developers’ projects are witnessing strong absorption, boosting off-plan sales and demonstrating Dubai’s renewed investment momentum and consumer confidence.” Dubai real estate bonanza fuelled by Expo 2020 success Gaurav Aidasani, founder and managing director of real estate brokerage Union Square House, added that the total number of housing units in Dubai is expected to reach one million before the end of this decade, beating analyst estimates about the city’s capacity to accommodate an average of only 25,000 new residential units annually. “With the new visa regulations and rapid economic recovery, Dubai is truly becoming a haven for long-term investors,” Aidasani said. “The city’s attractiveness is owed to many factors, including government efforts to ease residency, facilitate business set-up and encourage inbound investment.” Supply boom Dubai saw 6,700 units being delivered in the first quarter of 2022, while a further 31,000 units are expected over the remainder of the year. In total, more than 740,000 residential units have been completed and over 50,000 are under development. Villas continue to form only a small fraction of 14 percent of all expected deliveries in 2022, while apartment units constitute the remainder. According to the Dubai 2040 Urban Master Plan, the city’s population has grown more than 80-fold over the past 60 years. Analysts estimate it needs an average of 550,000 additional residential units to meet the projected 5.4 million population by 2040. “Realisation rates may be slightly lower subject to supply chain issues, however many developers are accelerating their completion timelines and aiming for handover this year in order to take advantage of favourable market conditions,” added Gurrapu. Prathyusha Gurrapu, head of research and advisory at real estate consultants CORE Her comments come as Fitch Solutions forecasts three percent growth in the UAE’s construction industry in 2022, marking a slowdown from 5.9 percent seen during 2021. Analysts anticipate that the market will see average annual real growth of 1.8 percent which will see the UAE’s construction industry value rise from $40 billion in 2022 to $46 billion in 2031. Fitch added that activity across commercial, residential and industrial construction projects will be the market’s main growth driver, showing a project pipeline value of $283 billion for construction projects within an overall $388 billion project pipeline which includes infrastructure. Data shows that the UAE currently hosts a project pipeline of 487 large-scale construction and infrastructure projects, of which 335 are commercial, residential or industrial. Specifically for residential construction projects, Fitch said the primary risk remains oversupply. “We have successively highlighted an excess supply of residential property, particularly in Dubai, as a prevailing risk for the feasibility of substantial future investment in residential construction in the UAE,” Fitch added. This risk was particularly prominent during Q4 2020 which saw the liquidation of major developer Arabtec and a pause on construction works by Emaar Properties, although the immediate pressure on Dubai’s property market has alleviated subsequently. Emaar, the biggest listed developer in Dubai, still posted record profits of $610 million for the first quarter of 2022. This was a 241 percent increase on the $179 million in the same period of 2021. Emaar also recorded a rise in international real estate sales, with founder Mohamed Alabbar saying: “We have increased our share in key markets of Egypt and India, capturing the strong increase in demand in these economies.” Visa reforms driving real estate demand According to CORE, recently announced property visa reforms and expanded categories for golden visas are expected to be an “unprecedented catalyst” for Dubai’s real estate market, a sector which is already witnessing strong demand. The luxury market is in particularly rude health, said Garrupu who added: “The trend of robust demand for prime residential continues in Q1. The demand for the luxury market is stemming from both end-users and overseas investors looking to relocate or buy a secondary home in Dubai. “While prime residential prices are well near 2014 peak prices, many buyers are largely agnostic to historical pricing and find Dubai prime waterfront property to be competitively priced compared to most global cities.” However, she added that inflation, supply chain disruptions, rising interest rates and pricing out of mid-market buyers and tenants are expected to be growing risks in the near-term.