Friday, March 06, 2009

Supply of Dubai residential units to dip 20% in 2009

About 20% of residential units may not enter the market in 2009, due to the current market conditions, say Dubai Land Department officials.

In 2008, Dubai market witnessed entry of 29,319 units this year, and another 31,003 units are likely to hit the market this year. But, in order to balance the supply situation amidst the current financial situation, this number is likely to drop by 20%.

Approximately 70% of housing supply in Dubai is under the control of three government-supported developers - Nakheel, Dubai Properties and Emaar.

There is also a 40 percent decrease in the 43,880 units projected to hit the market in 2010. There is also a 45% drop in transactional value, says Assistant Director General of Dubai Land Department, Mohammad Sultan Thani.

Currently a total of 875 projects are registered with RERA, out of which, 685 projects have escrow accounts, while the rest 180 units are either more than 60% complete or have total bank guarantees. The numbers of developers too have reduced to 427 from 800.

Among the projects announced, RERA predicts that 25% of the projects may have a delayed start, or will be put on hold due to tight market conditions. Another 25 percent of the projects may see a merger of companies, while about a quarter of the projects may be rescheduled. The rest 25 percent of the projects will see a timely completion by 2009 or 2010.

According to bin Galita, controlling the supply may be a good sign, as it is easier to manage, and will render the market only the number of units required.

So far, only two projects have been cancelled. Another 27 projects may have to be cancelled, says Bin Galitta.

Beginning next week, RERA will begin a monthly progress report of various construction projects in Dubai on their website. This monthly report will be for every project with escrow account, under progress in Dubai.

This initiative is hoped to generate confidence in investors about the comfort and knowledge they require about their investments, and help in further preventing investor-developer disputes.

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