Developer Supply and Demand

Everything from sales of electronic gadgets, to cars and houses is ruled by the age old relationship of supply and demand. As supply increases it can tend to have a negative effect on demand because people will have more options and therefore a better chance of negotiating. According to Forbes, Dubai was recently voted in the top ten most influential cities in the world after cities like London, New York, Paris and Hong Kong. It is important therefore, that we in the real estate industry strive to meet and exceed the highest standards in the world in cooperation with Dubai Land Department

Previously Dubai was a city which was developing from zero and the rest of the world was not aware of what it was like to actually live here. With the strides Dubai has made, it is at the forefront of many people’s minds as the desirable destination to be. But this hasn’t come easy. It has taken years of structuring, building and maintaining different sectors of Dubai including property. As well as the countless sky rises, hotel resorts, shopping malls, Dubai has had to ensure it maintains its culture and identity whilst never failing to amaze the world with every new development.

With constant expectation of the property sector, to each time surpass the last achievement, it can be very easy to keep building bigger and better towers but forget to analyze whether it is the right time to bring new supply into the market. If you oversupply the market with units at a time when the demand is not as high, you run risk of putting units into a diluted market with less chance of getting sold.

At the beginning of the year developers were releasing developments at a very high rate. such as each week a new building would come into the market. One example of this was a major developer promising to bring 52 new buildings into the market in 2014. In the current market this would have been detrimental to demand for both new and existing developments. We would possibly have seen a major adjustment in prices and therefore units would have remained unsold.

Fortunately developers have been adapting to the market conditions and adjusted to ensure that price and inventory increase at a healthy rate. The market is always open to versatile qualitative developers with a more complete community view to their development plans.  An example of this is Meraas’s “The Beach” development in JBR and “City Walk” which holds promise of new caliber of developments.

 The government is finalizing plans for more environmentally friendly options such as solar panels on residential building, which could feed power back into the grid. Demand is shifting to a different type of property. Therefore developers who are one step ahead are moving ahead of the market by releasing sustainable projects such as Diamond Developer’s “Sustainable City.”

With Cityscape just around the corner it is looking very promising for the general outlook of Dubai’s Property market. New developments will be showcased and to some extent redefine Dubai’s identity and solidify its position as a world hub and gateway to everywhere. We are confident the demand in Dubai will grow at a steady rate while at the same time entertaining the world with its astonishing diversity and life enhancing city planning.

Source: Safura Abbas

Safura Abbas is General Manager, Aston Pearl Real Estate