As the residential property market in Dubai continues to mature, the demand has surpassed the supply in the past two years; it is hardly a surprise that Dubai real estate property prices are increasing so swiftly. According to a recent report from EFG-Hermes, the Regional Investment Bank, there is not going to be any decrease in the property prices of Dubai until 2009.
Lack of Completed Projects
It has been noticed that the delivery of completed projects in Dubai this year has touched only 11,000 units, whereas the expected target was around 57,000 units. This clearly points to the fact that Dubai real estate market is witnessing a far slower pace of events. In other words, demand continues to exceed supply in Dubai real estate market.
Most of the real estate experts have revised forecasts of housing unit supply for the next two years on the basis of difference in demand-supply. The estimated forecast for 2008 is around 64,000 while for 2009 this number goes up to 68,000.
More Demand than Supply
With increase in Dubai population, the demand for property is also increasing with every passing day. If the recent trends are anything to go by, the population of Dubai would be around 1.9 million by 2010. The population of Dubai at present is around 1.4 million and if it continues to increase in the same rate, there is a good chance that the demand for housing in Dubai would increase up to 45,000 to 50,000 new units annually.
Average Pricing in Dubai
According to media reports, supply in Dubai residential property market this year will be somewhat restrained. However, everyone is expecting 2009 to be the peak year for supply in Dubai real estate market. There are some reports in media that there is going to be a 10-15 percent increase in average prices of properties this year.
Next year, there is going to be an increase of around 5 to 10 percent in the real estate properties of Dubai. In 2009, prices of properties can dip a bit but it will depend solely on the speed at which developers build new units. Regarding the rental prices of Dubai properties, there is a strong possibility that the rental growth rate is going to be the same as it is currently.
All in all, one can say that Dubai real estate property prices are increasing so swiftly because supply has surpassed demand. With real estate developers of Dubai working overtime to complete new units, there is a good chance that prices might go down a bit by the next few years.