Over

The podcast discusses oversupply in the real estate market and the sales and rental market activity in Dubai. It mentions that there is a need for 550,000 more units until 2030 to accommodate a target population of 6 million. The podcast also suggests that there is an undersupply of villas and townhouses, making them a good investment option. The sales transaction volume has increased by 19.8% in quarter one of 2024 compared to the same period in 2023. Alright, we are going to start this podcast in a few minutes. Let's do the introduction and then we'll go into the detail of what we are going to talk about. What's up, everyone? What's up, everybody? Welcome back. Hey, welcome back to this channel, to the Real Estate Mate channel, because everybody needs a mate in real estate. As usual, you should know by now, if you don't know, because you're new to the channel, there's a link in the description of this video. It's a 30 minute invite. You can schedule a convenient time into my calendar that matches your calendar for 30 minutes. It's completely free where we dive into the details of the market, answer unanswered questions that you might have, and also talk about your investment aspirations in a dynamic market like Dubai. In today's video, we're going to talk about oversupply. It's a question that everybody has on their minds, and looking at this dynamic market, looking at one launch a day, where do we stand in a couple of years from now? Will we have an oversupply? Is there an undersupply? I think the answer would be very interesting to you. It's going to be mathematically. It's not just going to be how I feel about it. The second topic that we are going to talk about, sort of the second and third topic goes and flows into each other, is the sales market activity for quarter one in 2024 compared to quarter one of 2023, and also the rental market activity in quarter one 2024 versus the same period last year. It's quite interesting and very important for you to stick around to look at the statistics of new contracts versus rental contracts versus the short-term contract activity that was done in the first quarter of 2023 compared to the same period last year. Stick around. Let's dive into this video. On the tail end of 2023, in November and December, we surpassed the previous peak in terms of the high sales prices. The previous peak was in 2014. If you look at the graph right in front of you right now, after 2014, there was a dramatic downfall, a gradual downfall in prices and sales activity, et cetera. And then 2020 was sort of the bottom out, and then it gradually started creeping up again as the cities opened up after the pandemic. Now the news of a dynamic real estate market has reached this little town or big city, wherever you live, it's reached you. And the information is quite intriguing. You've heard stories about people making lots of money in a period of two to three years, buying a property, getting out six months later or a year later and making 30, 40, 50, 100% appreciation. But you can't help to think in the back of your mind, you're thinking, well, if it is such an active market right now, and we have surpassed, clearly surpassed the previous peak in 2014, am I buying at the top? And are we going to, because as humans, we want to look back and look at the data and say, well, based on historical data, this is going to happen again. And then you can't help to think if I buy now and that happens again, am I out of luck and at a loss? What you're seeing on the screen right now is a article that I follow every single month to see if we are still experiencing a month on month value increase. And for the past 38 months consecutively, we have witnessed an increase in property prices. For the last 38 months, since the bottoming out of 2020 in the real estate market, the market has gradually just gone up every single month. Now, you've probably had a question and have seen the property market in Dubai since 2021 and you thought, can it be that good? How long can that still go on for? And six months later, you might have seen something again about Dubai and it's too hot. It's too hot. Can it continue? Well, 30 months, 38 months later, it is still continuing. And my answer to you or my statement to you rather is, don't time the market. Time in the market beats timing the market every single time. I just see a message from a client who I met with for that 30 minute meeting link that I have in the description. He just sent me a WhatsApp asking me questions about the market. Isn't that funny? While I'm doing a video about the market, Kathy, I will get back to you shortly, mate. So we're going to look at oversupply and I'm going to record my screen as I do the calculation. So my rule is no public math, but we're going to do this. So an oversupply is a problem. If there's more property than people, it is a problem. So oversupply or supply and demand or property available isn't the only driver that is going to keep the market moving forward. I use an example of sophisticated older cities and countries like New York, like London, like Cape Town, South Africa, where I'm from. There's not a significant amount of new development happening. New development in the sense of they're taking over all buildings, refurbing them and giving them new concepts to really match the theme and the need of the current client. I can see that within the new architectural guidelines and designs and amenities within buildings that are being launched right now as they're catering to a certain type of demographic. Those things are changing in our cities. But your city where you're in has reached a maturity many, many, many, many, many years ago. A maturity where there's nothing left to build in the city, there's no room to build, there's no room to expand. They're probably just going higher, not wider. Are people ceasing to buy property? No, because the needs, requirements and the desires of generations continuously evolve. People want X, then they want this, then they want that. People will continuously need housing. They want to upgrade. They need to downgrade. Situations change. There's always a transaction happening in your city. As we speak, somebody is buying a property. Every second a transaction happens in your city, Australia, wherever you are. If we reach the target of our population, it doesn't mean that we're going to stop the population from growing. If we reach the target of delivery to really feed the demand, it doesn't mean that they're going to stop building. It doesn't mean that transactions are all of a sudden going to stop happening. Now let's look at the screen record here. The target is to have six million people as residents in Dubai. The census report by the Dubai Statistics Center have recorded that an average household in Dubai has around 4.8 people in every household. Take the six million and we divide that by 4.8. That's 1.2 million properties needed for six million residences with an average capacity of 4.8 people per household. In Dubai currently, there is 700,000 existing units for the 3.6 million residents that are in Dubai. That leaves us with a need for 550,000 units until the year 2030, which is the grand vision for six million people to have residency in Dubai. If we divide the 550 by the 16 years that we have to get to that target and that year, that means that we need 34,000 new units to be delivered every single year until the 2030 mark. If we connect the dots looking backwards and we're looking at how many units have delivered in 2023, in 2023, 32,000 units handed over. With the need that we have for 34,000, that means that there is a delta between how many we need and how many we got. There's 2,000 units missing to really comply with how much we need. That's not a dramatic undersupply. That's an adequate supply. I was really excited to see this because it could be easy for me to manipulate figures and tell you there's a massive undersupply. You should buy any unit you see right now in any area because you'll be able to sell it in two years time for profit because there's just not enough. There is some merit to that depending on the sector that you're buying in. If you're buying in the apartment sector, you need to have a longer term view over what you want to do with that unit. Because there is more supply of apartments than villas and townhouses in the city, your exit strategy should be pushed to after handover. If you're looking to buy villas and townhouses because there's a dramatic undersupply in that segment still, at least for the next three to four years, you will be able to exit on the timeline that you currently have or might think that you have. There's different nuances to take into account when you're looking at your specific goal for investment in the city. When it comes to the question, are we going to be oversupplied, more people than property is a problem, it's clearly not going to be a problem. That's a testament to the amazing execution that this government has when looking at implementing the plans that they have set for the grand vision of 2030. I hope you found value in this. If you have an opinion, there's a comment section just for your opinion. I respond to all the comments and the questions that you have. If you want to discuss specific investments, if you want to discuss a few unanswered questions that we didn't answer on this channel or in this video, there's a link in the description. It'll take you to my calendar, 30 minutes. It's completely free. It's a dynamic chat answering the questions that you have to help you be more informed with the next steps that you take when you're investing and adding to your global portfolio. I'm your real estate mate because everybody needs a mate in real estate. market performance, the total sales transaction volume for quarter one for 2024 versus quarter one 2023, we will see that there was a 19.8% increase in the property. Now let's dive into the statistics for quarter one. We're looking at the sales market activity for quarter one 2023. On the screen, you will see my recording. Total sales transaction volumes for quarter one 2024 versus quarter one 2023, we saw an uptick of 19.8% in the volume of sales recording 37,154 transactions in the first quarter of 2024 versus only 31,027 transactions in the first quarter of 2023. Then we break it down to look at the existing versus off-plan. In the existing market, the volume increased by 10.4%, 16,589 transactions happened in the first quarter of 2024 in the ready market versus only 15,029 transactions in the first quarter of 2023. This is really positive to see. In the off-plan transaction criteria, in the off-plan sales transaction volumes have increased by nearly 29%, so 28.6% to be exact, 20,565 off-plan transactions happened in the first quarter of 2024 versus only 15,998 in the same quarter last year. The off-plan transactions value has increased by 25.6%, so it got more expensive. So it's 25.6% to be exact, more expensive to purchase off-plan in the first quarter of 2024 than it is in 2023. We can also see this as appreciation for those who have bought prior to 2023 or in the beginning of 2023, you have seen a significant increase in your price per square foot as well. 55 areas in Dubai saw off-plan transactions and 59.4% of all off-plan transactions were actually only done in these 10 locations. This graph shows us the total transaction volumes by area, so these are the top 10 areas in which transactions have happened, and it shows you quarter 1 this year versus quarter 3 last year, what the transaction volumes are. Have they increased or have they decreased? I see a decrease in Marsa Dubai, which is Dubai Marina, a 24% volume decrease in this quarter versus the same quarter 2023. This is the beginning of 2024, it's going to be interesting to see what the statistics are for Dubai Marina, which is a very popular area. At the end of quarter 2, quarter 3, and quarter 4. But it comes as no surprise that the transaction volume has increased in JVC, which is consistently in the top 5 best areas in Dubai by 7%, and also Business Bay, always consistently in the top 5 of top areas every single month for the last three years, maybe even more than that. The volume increased by 3%. Rental contract statistics is something that not a lot of people talk about, or to my knowledge talks about, so it's interesting to bring these in here as well, to look at new rentals and renewals, what the activity is around that, it's extremely important if you are an investor looking to build a rental portfolio, so let's dive into this. Annual rental contracts in the first quarter of 2024 versus 2023. year-on-year increase of 29.1% by registering 202,209 contracts, compared to only 156,000 contracts for quarter 1 2023, to record the new highest high in rental performance. So according to the Dubai Land Department data here in front of me, quarter 1 2024 saw around a 50.8% of the total contracts were new contracts, so 50% of all contracts were new contracts, while 49% are renewal contracts. Annual contracts, so we've got annual contracts and short-term contracts, annual contracts contributed to 93% of the volume, and short-term contracts only contributed ... So I've got the data open up here in front of me, explaining sort of what's happening in this graph, but adding more context to it. So in quarter 1 2024, the rental contracts witnessed a year-on-year increase of 29%, so we've got 29% more rental contracts done in this quarter versus the same quarter last year. This quarter we registered 202,209 rental contracts, where last year we only recorded 156,000 contracts in the first quarter of last year. Now according to Dubai Land Department data, in the first quarter of 2024, around 50.8% of the total rental contracts were new contracts, and 49.2% were renewal contracts. And then also they go down and they break it down even further for us. The annual contracts, so we've got annual and short-term. Annual contracts contributed out of the 202,000, annual contracts contributed 93.9% of the total, and only 6.1% was short-term contracts. I think that's enough statistics for today. We're going to dive into a few new projects in the next video, exciting new villa communities by Ima and Demac. So stick around, subscribe if you like this, please comment, thumbs up. I'm your Real Estate Mate and I'll see you on the next video. Bye.