Out of the box

The imbalance is not in the quantitative surplus but in the "qualitative"

Ismail Al Hammadi

January 28, 2021

One of the market studies indicates that the real estate market in Dubai recorded more than 38,000 housing units entering last year, while the number is expected to rise to about 53,000 units to be delivered this year, compared to about 65,000 new units in 2019.

From the angle of looking at the total number and comparing it over the three years, we find that the number has diminished, which gives an initial impression of the market regaining its path by balancing the supply and demand equation, but what if 50% of all that number represents one type of residential space in which the market is in surplus In it for years, such as studio apartments or a room and a lounge .. What if that number does not meet the largest proportion of the needs of market participants in terms of type and area?

Can we say here that the equation has been balanced, or we say that the supply has doubled, so in my opinion the increase in the number of units entering the market or its decline is not a sufficient criterion to balance the supply and demand equation, rather we are required to adopt another criterion to restore the path that depends on the quality, not the quantity.

We broke almost all boundaries to enhance the status of the sector and everything that was impossible yesterday has become possible today, despite all that the sector has achieved, which cannot be compared to the largest real estate markets in the world, but we still focus in our readings of market performance on the quantity of projects offered without focusing on their quality.

Now, let's ask ourselves, how many one-bedroom apartments are in the market, how many have been occupied and the rest not used yet?

How many three-room apartments in the market have been occupied, and the same question arises about a "duplex" apartment, a separate or adjacent villa, and others.

Obviously, we are still looking at the total number of real estate products only. If the number exceeds its limit, we say that there is an abundance of supply compared to demand, and we begin to search for ways and solutions.

Some developers still view what they produce as a number and in terms of building quality, design and location, while they do not pay much attention to the quality of these products as a main criterion that contributes to improving the investment environment, and attracting new segments of investors and end-users of the property.

Most of the developers today view their products as an investment, not the end use of the property.

Here, we direct our attention to reviewing their basket of products in terms of quality and areas, not quantity, and what matches the current market requirements and future trends.

We also direct their attention to adopting a clear real estate map for Dubai that would produce realistic and tangible outputs in the real estate product according to the size and quality of the projects and housing units offered, and to create a true and fair budget for this product by conducting periodic studies of the quality of projects and units needed by the market.

How much luxury real estate does the market need, how much does it need from a hotel room, how much industrial property does it need, how much does it need from a separate or connected villa, how much does a duplex apartment need, and how is it accurately distributed over the areas of Dubai.

Perhaps this is what must be adopted as a new standard to establish a strong real estate market features in which supply is equal to demand .. Yes to the process of controlling the number of real estate projects, but at the same time it needs a quality control process aimed at drawing a clear real estate map for Dubai with realistic and tangible outputs that relieve developers and agencies Concerned with the sector the trouble of poor regulation and an increase in the quality supply, because the defect today is not in the quantitative surplus, but rather in the qualitative surplus .. Will we ever see that?

To read the previous articles of the writer please click on its name.