Dubai's ruler issued a directive on Monday that would curb the pace of new real estate construction projects as property prices fall and the sheer scale of developments threatens to outstrip demand.
Sheikh Mohammed bin Rashid Al Maktoum ordered the creation of a committee to study the needs of the real estate market, evaluate all future projects and control the pace of projects, a statement by Dubai's Media Office said.
The move comes amid a slowdown in Dubai's economy and a slump in real estate prices.
Dubai's real estate sector is a bellwether for its economy. It not only caters to the emirate's residents, but also attracts wealthy investors from around the world seeking a safe place to put their money.
Property values, however, have been steadily dipping. A report by UAE-based Property Finder found that Dubai apartment and villa sale prices for the first half of 2019 were down around 12 percent compared to two years ago.
Developers, however, continue to build at breakneck speed, and have completed around 21,000 residential units in the first half of the year, according to Property Finder. More than 38,400 additional residential units are scheduled to be completed by the end of the year.
Dubai's major developers, like Meraas, Emaar, Damac and Nakheel, have plans for new cities, neighbourhoods, malls, skyscrapers and fantastical concepts like floating homes with floor-to-ceiling glass rooms submerged in the waters off the emirate's coast. The projects represent Dubai's ambitions to grow as a tourism destination and financial hub.
Developers are churning out a pipeline of projects in the lead-up to next year's World Expo in Dubai, despite concerns that an oversupply is weighing down real estate prices.
Dubai is already home to six mega-sized malls, including the Dubai Mall, which is one of the world's busiest and largest. Another six large malls are currently under construction.
Dubai is also already home to the world's tallest tower, the Burj Khalifa, located in the area's glitzy downtown. Yet an even taller tower is under construction in Dubai's historic creek area and will be flanked by a new residential district.
The newly formed real estate oversight body will be chaired by Sheikh Mohammed and will ensure new projects are innovative and add value to Dubai's economy.
It "will assess the state of the real estate sector, study the needs of the market, evaluate all future real estate projects, develop an integrated plan for the real estate sector to regulate and control the pace of projects, and achieve a balance between supply and demand," the statement said.
"It will also direct real estate entities to develop new innovative projects focused on quality rather than quantity," it added.