Dubai’s property boom is set to continue until the end of the decade, according to research published on Sunday. A study by the Middle East Economic Digest (Meed) found demand for property would continue to outstrip supply until at least 2010. Meed said by 2010 an estimated 175,000 new residential units would be available, but demand is still set to outstrip it, with an estimated 181,000 units required by that year.
The research, conducted by Dubai-based businessman Fouad Bardawil, flies in the face of previous forecasts that predict a significant drop in house prices in the coming years.At the end of last year Egyptian investment firm EFG-Hermes predicted rents and property prices would begin falling in 2008.EFG said at the time Dubai would see an oversupply of units starting in 2008 when the bulk of current construction is due for delivery, with the number of residential units doubling to 530,000 by 2010.However, today's research by Meed says the two key factors behind the sustained demand are the continued population growth and falling occupancy rates.In 2006, Dubai’s population rose to around 1.4 million, an annual increase of 7.6%. Meed estimated this figure would reach 2.5 million by 2010.Meed also predicted the average number of residents per unit in Dubai would fall to around 5.5 in 2010, down from 6.4 in 2005 and seven in 2000.“The received wisdom among Dubai’s investors and real estate experts is that the current pace of growth is unsustainable,” said Sean Brierley, editor-in-chief of Meed. “But [our] research provides a convincing argument that the emirate’s development boom will continue for at least three years.” Source
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