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The lack of affordable housing across all areas of Dubai is not only a cause of great concern but is now also forcing tenants to consider neighboring emirates such as Sharjah and Ajman. The growth population and Dubai’s young age profile need to see more houses in the lower segment of the market.
In 2013, we saw apartment rents increase by an average of 30% and as high as 45% over the past two years. Emerging places such as Dubai Sports City, Jumeirah Village, International Media Production Zone (IMPZ) and Dubai Silicon Oasis, along with the well-known Discovery Gardens and International City, are very quickly becoming unaffordable for the budget-conscious resident.
The RERA rental index has slowed down the rise in rental prices ever so slightly, but there is still a concern for demand exceeding supply of projects being handed over in the residential pipeline. The next four years should see around 65,000 units being handed over with 83% of those being apartments. However, affordability is still the major driver.
This short supply issue is under further pressure with the expectation that 260,000 new affordable units will need to be delivered in the lead-up to the Expo 2020.
Without creating ghetto communities, this needs to be addressed and it seems that the housing requirements of a large segment of the workforce are being overlooked. Access to affordable housing is a basic human right and need.
Cheaper housing options provide developers with lower returns so they continue to compete and deliver in the high-end segment. The desire to deliver the biggest and the best, coupled with high land prices, does not make financial or competitive sense for developers to cater to this cheaper market. In saying that, market leader Emaar has recently launched a new wholly-owned subsidiary, Dawahi Development, to drive value housing projects for mid-income expatriates.
Dubai is a positive real estate market leader in the region and we need to close this gap before the residents of Dubai lose sight of what the definition of ‘affordable’ actually is.
• Housing needs for the majority of workforce are currently being overlooked
• Though many projects are being rolled out, affordability remains a major driver
• Emaar launched a subsidiary to drive value housing for mid-income expats
Source: Zarah Evans, Special to Properties
The writer is Managing Director, Exclusive Links Real Estate