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Sun & Sand Developers is building a ‘show home’ of an affordable property — and a complete building at that.
“We wanted to show that creating budget homes that are true to their meaning can be done in Dubai from a construction and project completion standpoint,” said Sailesh Israni, CEO at the developer.
“A product that is affordable to the genuine end-user and this can only be achieved by a developer looking at economies of scale and reducing his profit margins.”
As per his reckoning, a local developer needs to cut margins from the early to mid- 20s on a standard project to under 20 per cent for an affordable one. The plan is to create four ground plus one-storey blocks — featuring 32 apartments in total — in Dubai Industrial City of 520-720 square feet.
The units will carry rental values of Dh29,000 for a one-bedroom unit and Dh38,000 for a two-bed. It is expected to take 10-12 months to build.
The plots were acquired for “Dh150 a square foot or so”, according to Israni.
“The plan is to first complete the project as a pilot case and to show that affordable units can be delivered to quality and within budget,” said Israni. “Once that’s done, we will show the prototype to the concerned authorities to confirm all the compliance measures.
“Then we could think of building more, in larger formats and offering them for sales as freehold.”
According to him, the choice of Industrial City had to do with the project being a low-density one and given its floor space index requirements. (If offered as freehold, the units would carry price tags of Dh325,000 for the one-bed and Dh459,000 for the two-bed.) In an ideal world, acquiring an affordable unit requires that monthly instalments for the buyer should not exceed 30 per cent of the salary.
Sun & Sand Developers have also come out with a case study on affordable homes, where it suggests that if the land is made available through incentive pricing, ‘the apartment (value) will go down further and people from an even lower income group can be accommodated’.
‘The government/master-developer must allocate land for a designated affordable housing at actual infrastructure cost. Land should not be free, or the sale of land must not be an economic loss to the government/ master-developers.
‘If the developer, the government and financial institutions support each other seamlessly the cost of a standard apartment can be reduced by nearly 36 per cent.
‘While the apartment may be available at an “affordable price”, to ensure its affordability is sustained, the developer may have a minimum tenure during which the apartment cannot be resold.”
Source: Manoj Nair, Associate Editor, gulfnews.com