In case you missed it, our Managing Director, John Lyons, recently appeared on Dubai Eye’s Business Breakfast to discuss key trends and forecasts in Dubai’s real estate market. The conversation focused on S&P Global’s latest report, which suggests that property prices and rents in Dubai may stabilise—and potentially decline—over the next 18 months. Here’s a closer look at John’s expert insights and predictions on the matter.
Rental Market Outlook: Stabilisation over Decline?
According to S&P’s report, Dubai’s residential market might see rent stabilisation or even slight declines as new supply is introduced over the next couple of years. John Lyons shared that, while it would be a relief for tenants if rental prices eased, he considers a significant drop in rents unlikely. He foresees stabilisation rather than a reduction, which aligns with the natural market cycle as new supply gradually enters.
The demand is heavily influenced by the city’s rapid population growth, and this is expected to keep rents steady even as more housing options emerge. John sees the upcoming supply as essential, especially in a city facing an undersupply in certain housing segments.
Addressing Supply and Population Growth
S&P Global’s report projected 3.5% population growth over the next two years. In response, John highlighted this figure is slightly below recent growth trends. Over the past decade, Dubai has seen higher growth, closer to 5%, and John remains optimistic that the demand will outpace the new supply if growth remains strong. The city’s vibrant economic landscape and appeal to international residents contribute to sustained demand, suggesting the rental market will remain resilient.
Will New Supply Satisfy Demand?
As Dubai looks ahead to a significant boost in new housing supply, especially in the apartment sector, John acknowledged the report’s estimate of 182,000 additional residential units expected by 2026. This represents an 88% increase in the rate of annual supply, with apartments comprising 80% of the pipeline. However, he noted that villa and townhouse supplies are expected to increase by only about 9.5%, which could keep upward pressure on these specific property types due to limited availability.
John emphasised that while apartments might see increased availability, villas and townhouses are likely to remain in demand, potentially sustaining or driving prices upward in those segments.
Balancing Supply and Population Growth: A Fine Line
Dubai’s real estate market balance hinges on population growth rates and supply. John shared his perspective on two scenarios: If Dubai’s population grows at 3% per year, as seen recently, the market could trend toward a mild oversupply. However, if growth hits the historical average of 5%, supply may still fall short of demand, keeping the market undersupplied.
In either scenario, the city’s forward momentum and high demand continue to create a promising landscape for both buyers and investors.
To watch the full interview, click here to visit our YouTube channel.
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