Oversupply in Dubai’s real estate market looks likely to continue, according to the annual market update from Cushman & Wakefield Core.
The Dubai-based real estate outfit revealed over 32,000 units were brought to market in 2019 – the highest number of residential handovers in the last decade - taking the total residential stock in the emirate to 550,000 units.
While Cushman & Wakefield Core has “conservatively estimated” that over 49,000 units will be delivered in 2020, with a particular focus on MBR City, Dubailand and Dubai South.
Prathyusha Gurrapu, head of research and advisory at Cushman & Wakefield Core, said: “We continue to witness increasing downward pressure on prices due to record supply volumes across all asset classes and the wider global economic and regional geo-political uncertainty.”
Sheikh Mohammad bin Rashid Al Maktoum, Vice President of the UAE and Ruler of Dubai announced the creation of the Higher Committee of Real Estate, in September last year, which was launched to help balance supply and demand.
The following month, Damac Properties chairman Hussain Sajwani called for a temporary end to new construction in the emirate in a bid to address the over-supply issues.
The number of new launches dropped by 58 percent compared to 2018, according to the Cushman & Wakefield Core report.
It comes as property prices continue to fall by around 30 percent compared to their peak five years ago.
The report said that 2019 was the fourth consecutive year of price softening across all asset classes, with the average drop in sales and rental prices standing at eight percent.
“The secondary sales market continues to be negatively impacted by surplus handovers,” it said. The weakest performing areas were in Dubailand (18 percent year-on-year drop), Discovery Gardens (14 percent) and Jumeirah Village Circle (13 percent).
Gurrapu believed there was plenty of grounds for optimism in the real estate sector, particularly as Dubai gets set to host the World Expo in October, with the largest ever government budget (AED66.4bn) announced earlier this year, a significant rise in new business licenses and record high real estate transaction volumes.
She added: “Dubai will be at the global centre stage during Expo 2020 and while we are excited to see what this year brings to the city in terms of population growth, tourism and investment inflows, we remain cautiously optimistic on the city’s real estate near to midterm outlook.”