Up to 21,500 residences could be handed over in Dubai by the end of this year, a new study has found.
More than 6,000 units have reportedly been delivered to date this year, with 15,500 handovers expected during the remainder of 2018.
Core Savills, following the launch of its Dubai Residential Market Update 2018, said that 21,500 is its “conservative estimate” of handovers for this year.
The report states that 2018 is a “critical year in Dubai’s real estate market trajectory”.
“This is the third consecutive year with average sales prices softening across most districts, along with widespread rental declines,” the report claims, adding that a recovery is “not yet in sight”.
However, tenants and owners in Dubai are at an advantage as a variety of residential options are made available at competitive prices, with greater flexibility offered by both the developers in new launches and landlords in the rental market.
Edward Macura, partner at Core Savills, said new stock in the city had “a cascading effect” on secondary sales prices, making it “one of the strongest reasons causing a delay in sales price recovery”.
Commenting on Dubai’s rental trends, Macura added: “Despite relatively lower rentals, the softened sales market has now made the cost of ownership lower than cost of renting for long-term occupiers, making it very attractive for tenants to move to ownership.
“This shift from rental to ownership is also shrinking the rental pool, leading to further downward pressure on rentals.”
Core Savills said that the early onset of Ramadan, and the upcoming summer months, may lead to a continued softening in the rental market this year. This effect could persist as “the next cycle of lease renewals leads to relocations in what is now an extremely tenant-friendly market”, according to the firm.
“Centrally located rental districts with strong demand generators, such as connectivity to work clusters [and] established community amenities are expected to be somewhat resilient, especially for stock that has already adjusted to rental market declines within the 2017/18 lease renewal cycles,” Macrua added.