Concerns have surfaced over the possible future oversupply of luxury housing in Dubai as a result of faulty assessments of supply and demand for top-tier residences in the emirate.
A “mis-match" in supply and demand, resulting in a potential lack of investors able to finance mortgage payments of approximately Dh18,000 a month for up-coming luxury properties in Dubai, say industry experts according to Gulf News, could create a disastrous over-supply in the higher-tier market.
Despite the danger and the fact that there is still a massive need for mid-income housing in Dubai, say analysts, luxury developers are continuing to overlook the provision of properties aimed at mid- income earners.
"There seems to be a lot of property which is coming on line in the next two years in the high end of the market, where prices average Dh900 per square feet. In the waterfront area alone you will not find anything less than Dh1,000 per square foot," said Khalid Nazir, head of investment banking at Abu Dhabi Islamic Bank.
"When you work out a 25-year mortgage on an average flat in this sector, the payments would be around Dh18,000 a month. There are many international and regional investors who would be able to pay that sort of money, but will all the supply be taken by them I doubt it," he added.
Nazir explained that luxury costs will be out of reach for most buyers if current demographic predictions are true.
