Dubai Faces Shortage of Smaller Apartments Due to Population Boom
Dubai Faces Shortage of Smaller Apartments Amid Population Growth
Dubai experiences a scarcity of smaller living spaces, particularly in older areas like Bur Dubai and Deira, due to a surge in population and limited development opportunities. The growing demand for affordable housing in these localities has outpaced the construction of new projects, resulting in a shortfall of smaller rental units.
Population Growth and Housing Shortage:
Last year, Dubai's population increased by over 100,000, and the past two years witnessed a rise of more than 176,000 residents. The influx of foreign expatriates, workers, professionals, and investors contributed to the population surge. However, the number of new housing units delivered during this period did not match the pace of population growth, leading to a shortage of smaller units available for rent.
Old Dubai Challenges
Old Dubai areas, characterized by neighborhoods like Bur Dubai and Deira, are grappling with a shortage of smaller units. Limited availability of development space in these established localities has hindered the construction of new projects to meet the rising demand. The existing housing stock in Old Dubai tends to feature larger, spacious apartments built 20 to 35 years ago, catering to the needs of larger families at that time.
Rise in Rental Prices:
Real estate consultancy Asteco's quarterly report indicates a double-digit increase in apartment rentals in affordable and old Dubai areas during the third quarter of 2023, rising by up to 23% compared to the same period the previous year. This surge in rental prices is attributed to the scarcity of smaller units in these localities.
Focus on New Dubai
New Dubai areas, offering freehold properties and characterized by modern residential and retail developments, have become more appealing to developers. The demand for smaller units is better addressed in New Dubai, where the supply is more aligned with the growing population. The availability of larger land areas facilitates the construction of studios and one-bedroom units.
Affordability and Luxury Divide
While Old Dubai retains its cultural richness and appeal, the scarcity of space limits the availability of smaller homes, leading many new residents to opt for sublet and shared apartments. The focus on high-end real estate developments in recent years has contributed to the limited availability of affordable housing and smaller units.
Market Trends:
Prime areas like Marina, Jumeirah Beach Residence (JBR), and Jumeirah Lake Towers (JLT) experience a higher percentage of sales and rentals for smaller apartments compared to Old Dubai. New Dubai's appeal lies in its contemporary lifestyle, state-of-the-art infrastructure, and luxurious residences, albeit with a higher price tag.
Developer Response:
Developers in New Dubai are working diligently to meet the demand for smaller units by launching new projects. Areas like Al Barsha, JBR, JLT, Dubai Marina, JVC, The Greens, The Views, Business Bay, and Downtown boast a higher number of studios and one-bedroom units, catering to diverse customer groups, including young professionals.
Conclusion
Dubai faces a housing challenge as the demand for smaller units, driven by population growth, outstrips the supply in certain established areas. The focus on high-end developments has further widened the gap in the availability of affordable housing. While New Dubai addresses the demand more effectively, efforts are needed to balance housing supply across different segments to ensure affordability and meet the diverse needs of the growing population.
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By- Sahiba Suri
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