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Whilst Dubai is renowned for its five-star luxury lifestyle, it has to be noted that the inhabitants of Dubai are not all multi-millionaires or earning six-figure monthly salaries.
In fact, a large percentage of the population struggles on a monthly basis to pay the high rents. In the most desirable locations, rents can be almost double that of a similar-sized property in the UK, for example. Of course, there are options to live in areas where rents are considerably lower, but then are the standard of living and future prospects that draw people to Dubai being compromised?
As in many industries, real estate is driven by supply and demand, and it is quite clear that there is a huge demand for more affordable housing options for those with lower budgets to purchase.
Dubai’s population has a very large younger demographic that is keen to get on the property ladder and build a home for themselves whilst saving on rents and offering future security. There is a clear lack of options here for housing specifically designed for single professionals, couples and families with budgets in the lower bracket.
The newly announced Town Square development, located close to Arabian Ranches, is one such project specifically designed to fill this niche. It will see a supply of properties, that range from apartments to townhouses, come into the market initially in the off-plan stage. As mortgage requires a minimum of 25% down payment, this new project will be extremely attractive especially if the developers offer the houses on easy payment terms. Although Dubai’s mortgage rates and other incentives are the lowest we have seen for many years and are comparable with many European offerings, the cap of 75% loan to value, 4% transfer fee, 2% agency commission fee and Dh4,000 transfer office fee make it extremely difficult for many to actually go down the mortgage route. It is frustrating, of course, considering that the mortgage payments would most certainly be far lesser than the rents residents are currently paying.
It is clear that the demand is there. All that is needed is for developers to recognise this and provide the supply.
• The UAE currently witnesses a high demand for affordable residential options
• The new Town Square project is developed to fill the affordable housing niche
• Property experts urge residents to buy as mortgages are much lower than rents
Source: Dawn Draper, Special to Properties
The writer is Managing Director, Pennington Real Estate LLC