The growth will help to relieve a shortage of office space and homes in the city in the short term.
Pressure on Dubai's housing stock, however, will get worse after 2010, according to Nicholas MacLean, managing director of real estate services firm CB Richard Ellis.
“Because of delays in construction, we have seen delays in delivering the stock,” MacLean says. “This has lead to a price bubble, but there will be quite a lot of supply to the market this year.”
He says there will be a downturn in housing deliveries in Dubai after 2010. “We shall not be able to satisfy the demand for accommodation after that date,” he says.
“The difficulty with accommodation here is affordability. Residential prices, particularly in apartments sector, are not increasing at the same rate as other parts of the market because costs are outstripping people’s ability to pay.”
MacLean says there are sections of the market that are undersupplied, notably low-cost accommodation and houses.
The current 32 million sq m of office space is also not enough for the emirate, he adds.
“There is a pent-up demand for office space of 2 million-2.5 million sq ft. The result is rising office rents and we have recently broken the AED500 [$136] a square metre barrier in Dubai.”
MacLean says he expects there will be enough demand to accommodate the increase in office space. “We have to ensure the infrastructure is expanded to deal with the increases in office accommodation," he says. "
There also needs to be a proper differentiation between good and poor offices and more control of the architects. "At the moment, buildings are being designed from the outside in. If these designs are allowed to come fruition, some of these buildings will never let.”
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