Over 28,500 residential units are likely to be handed over in Dubai by the end of 2019, says the consultancy Cushman & Wakefield Core in a conservative estimate. This is compared to an announced number of 56,000 units.
Around 21,700 residential units were delivered in 2018, the highest number of deliveries since 2011. Approximately 83 per cent of 2018 deliveries were apartments, while 17 per cent were villas. With over 25 per cent of the total stock, Dubailand continues to see the highest number of deliveries, followed by Jumeirah Village Circle and Triangle (13 per cent).
Prominent handovers in 2018 include multiple project deliveries in Damac Hills, Hayat Townhouses, Bluewaters Residences and Oia Residences in Motor City.
Of the 2019 deliveries, around 81 per cent is expected to be apartments, while 19 per cent are villas. The majority of the deliveries are forecast in the affordable to mid-market segment in the outer areas with Dubailand and Jumeirah Village Circle and Triangle accounting for one-third of all handovers, forecasts Cushman & Wakefield Core.
According to Cushman & Wakefield Core's annual Dubai market update: "2018 was a year of landmark reforms, with the UAE government announcing a number of resident and investor-friendly initiatives. These reforms are expected to have a far-reaching positive impact on business sentiment, tourism volumes, investor profiles and the talent pool that the UAE will attract and retain. While other demand-side indicators such as GDP, population and secondary sales volumes also display steady growth, supply-side deterrents continue to impact the market - a trend expected to linger over the near term."
Edward Macura, partner at Cushman & Wakefield Core, said: "2019 and 2020 are critical years in Dubai's growth trajectory. Although the pace of price softening has relatively slowed, we expect a lag in sales and rental price recovery as existing vacant stock and future supply over the next couple of years is expected to outpace steady demand."
"That said, the market is highly occupier friendly due to the wide variety of options now available at very competitive prices with higher levels of flexibility offered by both developers in new launches and landlords in the rental market" Macura added.
Off-plan transaction volumes dropped by nearly 30 per cent from 2017 to 2018, while secondary market sales (both cash and mortgage sales) saw a 9 per cent spike, reflecting an end-user market.
Macura explained: "This slowdown in off-plan transactions reflects two trends, the first being that there were fewer off-plan launches in 2018 compared to previous years. Secondly, developers prefer to sell inventories closer to the actual date of delivery to gain higher traction from both investors and end-users alike. This trend is re-affirmed with transaction volumes in the ready sales market witnessing a steady increase over the last three years. Interestingly, despite overall softening sales prices, the average unit price in the secondary sales market has also shown relative resilience. On the other hand, the average unit price in the off-plan market continues to contract, reflective of both lower price per sqft and smaller unit sizes resulting in lower ticket prices."
With existing unsold stock and inventories brought to the market over 2018 to 2020, sales prices are forecast to remain under pressure in the foreseeable future.
"We expect rents to remain under pressure in 2019 and the rental market to continue being tenant-friendly, with landlords reducing rents during renewals to retain tenants and maintain occupancies, with many also open to multiple cheque payments," Macura observed.