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New residential projects are getting cheaper in big cities across the globe as there has been a shortage of affordable homes. This trend has turned the affordable housing segment into a lucrative niche catering to the requirements of middle-income clients.
This trend can already be seen in the UAE as many new projects in Dubai are noticeably adjusted to match the demand. Major players are now venturing into this, becoming more in touch with what the major chunk of investors really wants.
The significant upswing in jobs created for the middle-class sector is strongly related to the growing demand for affordable property. Developers are employing innovative techniques to motivate end-users to buy rather than rent. The marketing success of these projects comes at a time when the Dubai property sector is reported to have witnessed a slowdown, with a stagnant rental scene and decreasing sales prices. Such affordable properties actually defy the market trend, with offers that customers really want.
Further boosting investor confidence, buyers are being offered flexible payment plans for off-plan properties. The plans make property sale more attractive and play a huge role in selling properties.
The new trend is good news for aspiring property buyers, especially expatriates who wish to live here for an indefinite period of time.
The strong demand for affordable housing now keeps Dubai’s property market buoyant. In Dubai, there’s a higher proportion of residential projects being launched at lower prices, stimulating the drive to affordability. This has made the city’s residential market highly fragmented, with some affordable locations achieving growth.
The new set of technology-enabled affordable properties are mainly being developed in Dubai’s southern region and its neighbouring areas including Al Furjan, Jumeirah Village Circle and Dubai South, in proximity to the Al Maktoum International Airport and the Expo 2020 site.
A glimpse on affordable offices in Dubai
There is a demand for properties within developed master plans, whether existing or under construction. This strengthens the long-term sustainability of the property sector.
The affordable housing policy is in its finalisation stage in Abu Dhabi as well. The capital plans to introduce a new policy that will make building affordable homes mandatory in all new developments. This move is expected to give a boost to the affordable housing segment, eventually helping prevent a bigger correction in the future.
The Abu Dhabi Urban Planning Council’s (UPC) planning and infrastructure sector earlier revealed that the affordable housing policy is expected to be approved before the end of 2016. Once approved, UPC will integrate it into its community facilities planning standards.
The low-cost property segment, which has been underserved for years, requires massive expansion. As the economy picks up and the population growth continues, developing affordable housing will allow investors to choose amongst several differing properties in a range of locations rather than putting all their eggs in one basket. The segment will also contribute to the ever-diversifying nature of the economy.
It is crucial for the market to accelerate the delivery of affordable and middle market housing projects over the short to medium term to satisfy the current demand.
The increasing cost of building materials, fluctuation of oil prices and other factors often restrain the construction of affordable homes, but the concern over cost can be solved with the application of modern technology.
Source: Manish Khatri, Special to Properties
Vice President, SPF