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Dubai: Affordable homes remains a chimera for the vast majority of Dubai’s tenants. And the numbers suggest there are no easy options to convert them into homeowners.
“Based on our estimates of the Ministry of Economy’s 2008 ‘Household Income Survey’, average annual expat incomes across the UAE currently stand at around Dh199,000,” states the latest Cluttons update on Dubai’s residential market. “Average residential rents in Dubai’s freehold areas at the end of third quarter stood at Dh181,000 per annum, highlighting the disparity between incomes and the cost of housing.
“Looking specifically at apartments, this figure stands at Dh109,000 per annum, whereas average villa rents are even higher at Dh143,000 per annum at the lower end of the spectrum.”
Muddying the prospects further, the average mortgage size based on these incomes would be between Dh600,000-Dh800,000.
“This would typically buy a studio or one-bedroom apartment in peripheral submarkets such as International City, the International Media Production Free Zone, Dubailand, or Dubai Silicon Oasis, which leaves single income households with little option but to continue renting,” the report adds.
Vastly underserved segment
“Despite attempts by Dubai Municipality to create designated affordable housing quarters in the city, this is yet to take off en masse and remains a vastly underserved segment of the market. To help drive developer interest, aside from prescriptive legislation on quotas for affordable housing, the authorities need to formalise the definition of affordable housing; not only in terms of those who could potentially qualify, but also the type of housing stock that needs to be created to help Dubai remain competitive.”
Faisal Durrani, Head of Research at Cluttons, said: “Several developers have brought schemes to the market that they present as being ‘affordable’, but true affordable housing remains a vastly underserved segment of the market.
“The authorities need to formalise the definition of affordable housing, in terms of those who could qualify and the type of housing that needs to be created, otherwise there is a real danger that the term ‘affordable’ will be permanently diluted and attractive to all income brackets.”
Source: Manoj Nair, Associate Editor, gulfnews.com