There is large scale construction happening in Dubai. Will there not be oversupply?
In fact, Middle East Economic Digest in a recent report (Khaleej Times, published on August 14, 2006) says that demand of houses in Dubai is CRITICALLY LOW and the number of flats needed by 2010 will hit 320,000. This means 64,000 flats must be built each year. With 800 residents joining the population of Dubai every day & 24,333 people added every month (ref: Gulf News 01 March 2007) are well behind this!
We also have to bear in mind that there is form & structure behind Dubai’s development. It is a carefully researched, well planned activity with a long-term vision.
As well, the government is releasing very limited land for development. This has a major implication on the real estate market. Dubai is currently sitting on a huge budget surplus.
Additional federal revenues from premium oil prices allow the UAE government to limit the sale of land. Its focus is clearly not to ‘add to already good revenues’ by sale of more land, but in building investors confidence in current projects and improving infrastructure.
Also keep in mind that the business community is growing enormously. 30 to 40 companies register with the Dubai Chamber of Commerce every day! In addition to this, Dubai plans to attract 15million tourists annually by 2010 and the city already has the second highest occupancy rate in the world so there will be additional demand on apartments from this sector!
