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Executive Summary
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.
There is an intertwined relationship between supply & demand equilibrium and price movement. Prices have always fallen subsequent to period of
oversupply (2009-11), and have stabilized and subsequently risen following periods of under supply.
Initial projections based on the collecting data from developers stated that 34,127 and 70,785 units will be handed over in 2017 and 2018.
However, a revised projection that takes into account cancelled/conditional projects, stalled and slow moving projects reveals that 2017 and 2018
will have realization rate of 79% and 44%. This thereby dramatically reducing the supply curve that analysts have estimated and/or have expressed
concerns about.
The fears of an oversupply continue to permeate the zeitgeist of investors and dampen sentiment. A simulation of different population growth
reveals that if Dubai continues to grow at its historical norm of 5% the supply is inline with the demand. However, if population growth edges
higher to 7%, there will be shortfall of roughly 10,000 units in the next two years. This implies that as population growth rates increase, fears of
over supply are unfounded.
A look into the occupancy rates of city-wide apartments reveals that in the last 7 years rates had troughed at 82.4% in 2011 and peaked in 2014 at
92.7%. Currently the occupancy rates are at 88.4% which is inline with its historical average. A look into different community occupancy rates
reveals the ‘suburban’ effect that is underway. The popularity of mid-income areas such as JVC and DRC have surged in recent years, having similar
occupancy rates of more established areas such as JLT and Marina. The rapid rate of change in the suburban areas is testament to the population’s
need for a more balanced housing market that is more affordable.
Contents
01
03
02
04Dubai Apartment
Occupancy RatesConclusions
Housing Stock, Population
and Prices
The supply landscape for
2017 & 2018
Housing Stock, Population and Prices
“I like the dreams of the future better than the history of the past”
Thomas Jefferson
Supply and Demand: A look in Dubai’s Housing Stock and Population
Housing Stock and Population Non-Labor* (2008 – 2016)
The above graph illustrates the growth rates of the population along with the housing stock of Dubai. The housing stock has been
growing at a CAGR of 7.7%, whereas the population has a CAGR of 5.92% over the last 9 years. 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.
Source: REIDIN / DSC
Population per Housing Unit (2008 – 2016)
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Population (Non-Labor) Housing Stock (Apartments and Villas)
3.0
3.2
3.4
3.6
3.8
4.0
4.2
4.4
4.6
2008 2009 2010 2011 2012 2013 2014 2015 2016
*Non-labor is defined as total population excluding residents living in labor camps
Relationship between Prices and Supply
Dubai: Over-Supply /Under Supply and Prices (2009-2016)
The above graph illustrates the supply and demand impact on the prices of the Dubai real estate market. What we infer is that prices
have always fallen subsequent to period of oversupply (2009-11), and have stabilized and subsequently risen following periods of under
supply. The demand for the number of units is inferred assuming that the density per household unit remains at 4. Any reduction in this
number implies that the number of units under supplied increases, thereby exerting further upward pressure on prices.
Source: REIDIN / DSC
Dubai: Over-Supply /Under Supply (2009-2016)
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
(60,000)
(40,000)
(20,000)
-
20,000
40,000
60,000
80,000
2009 2010 2011 2012 2013 2014 2015 2016
Over Supply / Under Supply Price Change YoY
Units Needed* Units SuppliedOver Supply /
Under Supply
2009 21,876 42,271 20,395
2010 23,537 47,463 23,926
2011 17,096 76,548 59,452
2012 17,973 16,949 (1,024)
2013 22,984 19,017 (3,967)
2014 14,615 6,597 (8,018)
2015 24,922 18,015 (6,907)
2016 52,362 16,670 (35,692)
*Units needed is calculated on incremental growth of non-labor population. It assumes 1 unit per 4 people
The supply landscape for 2017 & 2018
“Analysis is the art of creation through destruction”
P.S. Baber
Supply Projection and Revised Completion Rates for 2017 & 2018
Supply Projection vs Revised Projections (2017-2018)
Initial projections based on the collecting data from developers stated that 34,127 and 70,785 units will be handed over in 2017 and
2018. However, a revised projection that takes into account cancelled/conditional projects, stalled or slow moving projects, and projects
that are behind schedule reveals that 2017 and 2018 will have realization rate of 79% and 44% (Appendix A), thereby dramatically
reducing the supply curve that analysts have estimated and/or have expressed concerns about.
Source: REIDIN / DSC
Expected Completion Rates (2017-2018)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2017 2018
Supply Projection Expected Completetion
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2017 2018
Is Dubai Over Supplied or Under Supplied for 2017 - 2018?
Supply Needed versus Expected Supply (2017-2018)
The fears of an oversupply continue to permeate the zeitgeist of investors and dampen sentiment. A simulation of different population
growths reveals that if Dubai continues to grow at its historical norm of 5% the supply is inline with the demand. However, if population
growth edges higher to 7%, there will be shortfall of roughly 10,000 units in the next two years. 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.
Source: REIDIN / DSC
Over-Suppled / Under Supplied (2017-2018)
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2% Population Growth Rate 5% Population Growth Rate 7% Population Growth Rate
Supply Needed Expected Supply
(20,000)
(10,000)
-
10,000
20,000
30,000
40,000
50,000
2% Population Growth Rate 5% Population Growth Rate 7% Population Growth Rate
Occupancy Rates in Dubai
“Facts are stubborn, but statistics are more pliable”
Mark Twain
Dubai Apartment Occupancy Rates
Dubai City-wide Apartment Occupancy Rates: 2010-2017
The above graph reveals the occupancy rates of the city-wide apartments of Dubai. In the last 7 years occupancy rates had troughed at
82.4 in 2011 and peaked in 2014 at 92.7%. Currently the occupancy rates are at 88.4% which is inline with its historical average.
A look into different community occupancy rates reveals the ‘suburban’ effect that is underway. The popularity of mid-income areas such
as JVC and DRC have surged in recent years, having similar occupancy rates of more established areas such as JLT and Marina. The rapid
rate of change in the suburban areas is not only testament to the population’s need for a more balanced housing market that is more
affordable, it is also indicative of the overall surge in demand for housing that is latent in the demand curve and has been systemically
and systematically been underestimated by the analyst community. We opine that this trend will continue further mitigating concerns of
oversupply.
Source: REIDIN
Dubai Apartment Occupancy Rates by Communities: 2010-2017
76.0
78.0
80.0
82.0
84.0
86.0
88.0
90.0
92.0
94.0
2010 2011 2012 2013 2014 2015 2016 2017 20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2012 2013 2014 2015 2016 2017
DRC JVC JLT Dubai Marina
Conclusions
Housing Stock, Population and Prices The supply landscape for 2017 & 2018
In the last 7 years occupancy
rates had troughed at 82.4 in
2011 and peaked in 2014 at
92.7%. Currently the
occupancy rates are at 88.4%
which is inline with its
historical average
Dubai Apartment Occupancy Rates Conclusions
The housing stock has been
growing at a CAGR of 7.7%,
whereas the population has a
CAGR of 5.92% over the last 9
years.
A look in the Dubai Housing stock reveals that since 2008 it has
been growing at a rate of 7.7% CAGR, whereas the population
growth rate in the same time period has been 5.92%.
There is an intertwined relationship between price actions and
movements in the supply and demand equilibrium. Prices have
always fallen subsequent to period of oversupply (2009-11),
and have stabilized and subsequently risen following periods of
under supply.
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.
We opine that Dubai is poised for a period of asset “reflation” and that
the zeitgeist of concerns regarding supply are exaggerated and
unfounded
An analysis of 2017 and 2018 expected supply collected from
developer completion rates expects there to be over 100,000 new
units in the market.
However after factoring for cancelled/conditional projects, stalled or
slow moving projects, and projects that are behind schedule suggest
that only half of those units will enter the market.
A simulation of different population growths reveals that if Dubai
continues to grow at its historical norm of 5% the supply is inline with
the demand. If the population grows more than 5%, which it did in
2016, we can expect a shortage of units, pushing prices upwards.
In the last 7 years occupancy rates of city-wide apartments had
troughed at 82.4 in 2011 and peaked in 2014 at 92.7%.
Currently the occupancy rates are at 88.4% which is inline with
its historical average.
A look into different community occupancy rates reveals the
‘suburban’ effect that is underway. The popularity of mid-
income areas such as JVC and DRC have surged in recent years,
having similar occupancy rates of more established areas such
as JLT and Marina
Projected Supply 70,785
Projects Cancelled / Conditional
Active-1,874
Projects Below 60% complete -41,635
Units of 2018 Completed in 2017 -1,895
Projects in 2017 that will be Handed
over in 20185,885
Expected Supply 31,266
Realization Rate 44%
Projected Supply 34,127*
Projects Cancelled / Conditional
Active-1,834
RERA Progress Static (No movement
Since 2016)-1,187
Projects Below 90% complete -5,885
Units of 2018 Completed in 2017 1,895
Revised Expected Supply 27,116
Realization Rate 79%
Appendix A: Revised Methodology Explained for Supply Projections
Revised Methodology Explained: 2017 Supply Projections*
Source: REIDIN / DSC
Revised Methodology Explained: 2018 Supply Projections
*2017 H1 - Handed Over Supply 14,164 units
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