17 August 2017

Dubai Supply: Myth Busters

An analysis of housing stock and population reveals that over the last 9 years the former has been growing at a CAGR of 7.7%, whereas the latter has a CAGR of 5.92%. From 2008 to 2016 the population per housing unit has decreased from 4.5 to 3.9, while occupancy rates have remained relatively stable inferring that population has become more affluent.

We can witness that from 2008 to 2016 the population per housing unit has decreased from 4.5 to 3.9, while occupancy rates have remained relatively stable inferring that population has become more affluent (the lower the density per unit the higher the per capita income). We opine that this trend will continue, especially given the trend of millennials in more developed markets.

The fears of an oversupply continue to permeate the zeitgeist of investors and dampen sentiment. According to the Dubai Statistics Center, the population grew at 10.6% in 2016.

This implies that as population growth rates increase, not only are fears of over supply unfounded; rather there is a significant possibility of sustained under supply as Dubai continues its expansion plans towards achieving its goals of the World Expo 2020 and beyond

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