More to affordable housing than just the pricing

Creating an ‘affordable’ housing development does not begin and end with setting a certain selling price to the units. It would be better for developers to take in a bird’s-eye view of what they are planning and then build accordingly. Building the properties first and then hoping for the rest of the end-user requirements would fall in place could remain wishful thinking on their part.

“It is important that affordable housing is provided in those areas serviced by public transport,” said Craig Plumb, Head of Research — MENA at JLL, the consultancy. “It is encouraging that Discovery Gardens and the Green Community will be served by the new 2020 Metro extension.

“Sites for affordable housing should also be identified within easy access of other stations on both the existing metro and future extensions. A major drawback of many of the current projects targeting the affordable sector — such as those around International City, in Dubailand and along Al Quodra Road — is that they do not have good access by public transport.”

This is where the city planners and developers need to be on the same page on what best suits the creation of accessibly priced homes in Dubai. Local authorities have, more stridently in the last three months, made it clear that such properties will have to be assigned high priority within the new project pipeline.

“Nobody’s saying start by building one within Downtown — but the city’s got plenty of options where developers can build from scratch they type of housing that authorities want,” said Talal Moafaq Al Gaddah, CEO of MAG Property Development llc.

The way to do it would be to have an ‘offset programme’.

“The evidence from Abu Dhabi (where the Urban Planning Council have sought to implement a similar quota system) is that developers will resist the idea of mixing different affordability levels within the same project,” said Plumb.

“The idea of requiring developers to provide affordable units in other projects — through some form of offset arrangement — is therefore attractive.”

The way this would work is fairly straightforward — for a new regular project seeking regulatory clearance, the authorities would require the developers to create a certain number of affordable units at another location. In return, the developers could be given incentives on land pricing or some of the other costs involved with the development process.

But the big question still remains as to what should be the pricing on these units. Categorising all units sold at a certain price or under as ‘affordable’ is definitely not how it should be done.

“There is no single benchmark in terms of price per square foot as much will depend upon the payment terms,” said Plumb. “It must also be remembered that most of the demand in this sector of the market will prefer to rent rather than buy units.

“Rather than identifying specific price points we are therefore basing our research on how much families earning different levels of income can afford to spend on housing.”



Source: Manoj Nair, Associate Editor,


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