#Dubai Property CEO Expects Supply of New Homes to Moderate - Bloomberg

Dubai Property CEO Expects Supply of New Homes to Moderate - Bloomberg

The chief executive officer of Dubai’s Union Properties PJSC expects surging construction and land costs to put the brakes on the supply of new homes in the emirate’s booming real-estate market.

“The market is going to regulate itself over the coming two years, just by the inflation and construction costs and inflation in land value,” said Amer Khansaheb, the CEO of Union Properties, a small publicly traded developer in the emirate that has seen its stock surge over the past two years. “This should be good for investors because as supply comes down a bit, it will regulate the demand.”

Dubai property prices have had one of their best streaks in decades. Home prices surged more than 75% since the end of November 2020, according Knight Frank. Developers have been launching a steady stream of projects amid rising demand from oversees investors and an influx of new residents coming from around the world. However, the surge in supply is fueling fears of a possible property market slowdown in 2027 as many of the new developments get completed.

Dubai may find itself with an annual surplus of 30,000 to 40,000 housing units by 2027, according to Bloomberg Intelligence analyst Edmond Christou. That may signal price-adjustment risk even as rental yields remain attractive enough to draw investors and absorb some excess, he said in a report.

Union Properties will launch 2 billion dirhams ($545 million) worth of projects in 2026 to add to its existing pipeline which is worth 4 billion dirhams, the CEO said. Despite the five-year rally, developers’ profit margins “are not abnormal” and remain healthy, he said. He see opportunities in commercial, industrial and hospitality development going forward.

“Years ahead, the challenge will not come from demand but from supply-chain management. We’ve seen some inflation in the cost of construction,” the CEO said. “The challenge forward is to manage costs and manage supply chain to be able to deliver on quality and value to our clients.”

Union Properties’ shares lagged competitors amid probes into alleged financial violations within the company by former managers which required a lengthy restructuring of the operations. But it has now been catching up, with the stock more than doubling over the past year to about 0.83 dirhams, according to data compiled by Bloomberg.