Supply shortage fuels uae ‘frenzy’

The UAE is suffering a major housing shortage, according to the Abu Dhabi Chamber of Commerce and Industry, who estimate that there will be a shortage of 20,000 homes in Abu Dhabi next year.

Unofficial estimates put this number at more than 35,000 homes. The study also said the housing situation is going to get worse.

In Dubai, developers are struggling to find building contractors with spare capacity, while raw materials are in great demand, putting some delivery of finished properties behind on their original schedules.

Mike Bridge presenter of The Property Week, the UAE’s popular radio show said, “Confidence is certainly back into this market, with sales in all Emirates reaching record figures.

The government of Dubai’s recent Escrow law, enabling both local and international investors to know that their funds are secure, has also fueled this buying spree.”

Massive supply needed

According to recent figures the UAE property market is worth a staggering AED201billion. But out of the total UAE mortgage market, just over AED43.6 billion has been lent to investors, with only 49% going into residential real estate.

The UAE population figures for 2006 show a total of 5.6million, which is a massive jump of 1.5million over the previous year.

Pundits expect a continued growth in prices over the next 18 months, as the market is still very liquid and many investors are cash buyers.

Mike Bridge added: ”According to government statistics, 800 people apply for residency in Dubai every day.

"That is over 292,000 a year, and at least 50% will require accommodation. Add to this at least 5% of the existing 1.6million residents, who have now decided to buy rather than rent, along with at least 25,000 sales from overseas investors, and Dubai alone will need around a quarter of a million homes just to cope in the next twelve months".