UAE oversupply of property means a correction ahead | The National

UAE oversupply of property means a correction ahead | The National:



"The oversupply of property in Dubai has increased by almost 8 per cent in the past month if you follow adverts for homes for sale or rent on the Dubizzle.com website that have topped 206,000. There are a record 116,000 units available for rent and 90,000 for sale. It’s not that much better in Abu Dhabi, where an astonishing 59,000 units are available for rent or sale, albeit the position for sellers is better with just 3,800 units on the market.



The influx of new residents into the UAE has been overtaken by a surge in the number of available homes. Most probably the flow of new immigrants has slowed with the return to authoritarian government in Egypt and maybe the majority of the Arab rich who wish to move to the UAE have now done so. At the same time developers have taken the opportunity to finish off projects launched many years ago in the previous boom as well as to initiate a perhaps too optimistic number of new ones.



I have noted before that a classic three-year property cycle is in operation. It started in late August 2011, when the US$25 billion Dubai World debt rescheduling was signed off. Last year was the price spike stage with 30 per cent gains for property prices and rentals in Dubai. It cooled off rapidly last autumn after transaction fees were doubled and new mortgage rules introduced. This summer is the phase when sales dry up and inventory surges. Presumably in the late summer and autumn there will be price cuts by “motivated sellers” and quite a steep fall in prices over the following six months."



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