Dubai Real Estate Market: Come Undone
Source: REIDIN , Author: Posted by BI-ME staff
Posted: Mon March 12, 2018 11:10 am

 UAE. It is a known fact that most new industries are fragmented and consolidate as they mature. Most new industries follow the Consolidation Curve which can be explained in four stages (i) Opening (ii) Scale (iii) Focus (iv) Balance and Alliance.

This trend has been witnessed throughout the world, and we have seen this to be no different in Dubai as well, whether the change is due to an innovation, or, as is the case of freehold real estate, whether it is due to legislative changes.

In the United States, in the first decade after the invention of the automobile in 1885 there were only 30 companies. However, soon after this number increased exponentially to 253 companies as demand continued to increase and by 1929 the number of players had contracted to 44 companies.

Likewise, it appears in Dubai as if a similar trajectory is being followed, where the number of real estate developers in freehold has jumped from slightly more than 100 in 2009 to more than 1200 currently (the active number of developers are likely a lot lower).

We opine that as the consolidation phase kicks in, the number of developers will shrink significantly (going by the automobile example and others, the shrinkage could be upwards of 75%).

Developer concentration in the real estate market has been evidenced in the off-plan market. Given the fact that the off-plan market accounted for 65% of the transactions in 2017, the market share that the top 3 developers enjoy has not been witnessed in other parts of the world.

We opine that as the market rebalances towards the ready market, over time, there will be a greater breadth of market activity; however, given the supply pipeline, it is likely that concentration will continue to be witnessed in the transaction volumes as smaller developers continue to consolidate.
 
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About REIDIN
Since 2007, we have been known for being the leading provider of property data and real estate information company for emerging markets. From being the first company to offer price indices enriched with hard-to-get real estate data in Turkey and UAE, we have become a global player in Data Analytics and Data Science utilizing the most advanced AI algorithms and techniques to process large amounts of our proprietary and client data.

Today we are a multidisciplinary Data & Analytics Company helping our clients make better strategic decisions, increase revenues, lower costs, and beat competition. Among our clients are government organizations, banks, insurance companies, retailers, property developers, brokers, consultants, and appraisers.

For more information, please visit www.reidin.com

About Unitas
Unitas believes in in-depth planning and discipline as a mechanism to identify and exploit market discrepancy and capitalize on diversified revenue streams. The purpose of Unitas is to manage, direct, and create wealth for our clients.

For more information, please visit www.unitasconsultancy.com

 

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