Leading real estate market information service, REIDIN, has reported that over the last 9 years, housing has been growing at a compound annual growth rate of 7.7%, whereas population has a compound annual growth rate 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 which infers that the population has become more affluent (the lower the density per unit the higher the per capita income). It is suggested that this trend will continue, especially given the trend of millennials in more developed markets.

Quick stats:

• Housing has grown at a CAGR of 7.7% in the last 9 years
• Population per unit has decreased from 4.5 to 3.9
• Historic annual population growth is 5%
• If growth rises to 7%, there will be shortfall of roughly 10,000 units

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Source: REIDIN

The fears of an oversupply continue to flood the outlook 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.

Source: REIDIN

According to the Dubai Statistics Center, the population grew 10.6% in 2016. As population growth rates increase, fears of over supply may be unfounded, and there is a significant possibility of sustained under-supply. This may cause further upward pressure on prices as Dubai continues its expansion plans towards achieving its goals of the World Expo 2020 and beyond.

For the full REIDIN report, visit their website. 

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One of the largest ultra-private villas on Palm Jumeirah