There's a face-off between population growth and property development as Dubai's projects break through the US$250bn (R1,75 trillion) mark this year.

By comparison, SA has about R35bn/year in development in the pipeline over the next three years. Add another R25bn for Gautrain and the 2010 soccer stadiums and SA, with a population of 45m, has equivalent development of R100bn - 0,4% of Dubai with its 2,5m people. According to a 2006 survey done by global branding firm Futurebrand, the number of new residential units in Dubai will grow from 240 000 last year to 585 000 in 2015.

"The issue of supply and demand hinges on the city's ability to sustain aggressive population growth," says the survey. "Dubai's population is growing at 5%, while the world population is growing at 1,6%. Only six countries sustain a growth rate of 4,2%."
 
According to the survey, after 10 years of massive growth, demand still exceeds supply. Prices have doubled in prime areas in the past few years, as have rents, with 65 m² two-bedroom flats in the old city centre letting for R20 000/month, and on the coast at Jumeirah for R19 000. This compares with R5 000/month for a similar flat in the Sandton CBD or Cape Town. The survey says 72% of tenants spend more than 50% of their salaries on rent. But the survey also notes that some developers are beginning to offer incentives, from cash-back payments, 0% interest and furniture, to luxury cars and free studio apartments, to buyers of expensive units - a sign that sales are flagging. About half of the new units are one- and two-bedroom flats.
 
But there are also signs that development is hitting the limits of infrastructure and management, with completion delays growing. This could keep supply down. Demand (594 659 units) and supply (585 000) will be almost equal in 2015 if the population grows by 5%/year. But if it grows by 3%, demand will fall to 470 000, creating an oversupply of 15 000 units and certain bust.