The supply of fresh real estate in Dubai will tumble by nearly a third this year as developers hold back units in a bid to manage the city’s saturated property market, Jones Lang LaSalle said Sunday.
The supply of residential, retail and hotel real estate is expected to be 32.2 percent lower than in 2010, a report from the real estate consultancy showed.
“The supply clearly is being held back. That is partly due to the market factors [and] it is partly due to the fact some developers have had trouble financing projects and making the last payments,” Craig Plumb, head of research at JLL, told Arabian Business. “There are a number of buildings that have been completed and have not been released to the market.”
Thousands of units are scheduled for release this year, despite an estimated 40 percent vacancy rate in homes and offices across the emirate.
JLL said some 25,000 residential units will be released on to the emirate’s property market this year, a drop of 31 percent when compared to 2010.
New retail supply will reach 140,000 sq m, a slide of 31.7 percent on the previous year.
Around 25,000 residential units are expected, a drop of 31 percent compared to 2010.
The hotel market will see the largest decline in supply, with 3,400 new rooms expected to come on stream in 2011 – around 55 percent less than the 7,700 that came online in 2010.
Plumb said an added number of new units may be held over to 2012 in a bid to pace the supply being released on to the market.
“Some space… will simply get pushed to 2012. The supply we have for 2011 will probably finish up less than we are forecasting,” he said.
In Abu Dhabi, the situation is reversed, JLL data shows. The capital will see a 108 percent surge in new real estate this year, driven by its residential market.
Some 25,000 new houses and apartments are due online this year, a massive 346.4 percent rise in the 5,600 units released last year.
Abu Dhabi’s retail market will see 331,000 sq m of space released to market in 2011, a rise of 100 percent on the previous year. The hotel industry is scheduled to absorb 3,000 extra rooms.
“Dubai is past the peak of its annual pipeline of new supply [while] Abu Dhabi is still approaching the peak for new supply,” the JLL report said.
Industry experts have long acknowledged the oversupply problem facing Dubai; however, there is little agreement on how long it will take to clear the backlog.
Mohamed Alabbar, chairman of Burj Khalifa developer Emaar Properties, said in November it would take at least 20 months for the city to absorb its surplus stock.
Chris O’Donnell, CEO of debt-hit developer Nakheel, said in December that the figure was closer to three to five years.