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The lack of affordable housing communities in Dubai may pose a hurdle in the industrial growth of the emirate, forcing many of the residents to be priced out. Urban planners believe that the emirate needs more than 260,000 new affordable homes to be built over the next six years. Going by the current per capita income of Dubai, affordable housing units are the ones priced between Dh45,000 and Dh60,000 a year in rent.
Around 277,000 jobs are being created to meet Dubai's Expo 2020 requirements in the next six to seven years. Of this, a significant portion of the workforce will be in the low and mid-skill levels, fuelling a big demand for affordable housing.
According to Asteco's recent market study, International City offers the most economic rental option with studio units commanding an annual rent of Dh35,000. Deira is the second best wallet-friendly location with studio flats available at Dh38,000. Studio apartments in Jumeirah Village and Discovery Gardens also fall in the affordable housing category, hovering around the yearly Dh50,000 mark. In the case of two-bedroom apartments, International City and Deira emerge as the most economical options followed by Discovery Gardens and the Jumeirah Village area.
Real estate analysts are hopeful that Dubai will witness a spurt of affordable housing communities as soon as developers realize that these communities can provide better rental yields compared to high-end locations.
Asteco's report for the second quarter of 2014 estimated annual rents have grown by a whopping 66 per cent at International City, a location preferred by those looking for affordable housing options. The rental increase of apartments in high-end localities like Downtown Dubai and Palm Jumeirah is significantly lower at around 21-24 per cent.
Some of the suggestions that have come from urban planners to promote affordable housing include introducing legislations that will make it mandatory for developers to reserve a certain number of affordable units in residential communities. In New York, developers who build affordable communities receive land from the government at cheaper prices to build high-end apartments as an incentive.
• About 260,000 affordable units need to be built in the next six years in Dubai
• Annual rents of between Dh45,000 and Dh60,000 are considered affordable
• International City and Deira emerged as the most economical rental options
Click on International City and read on one of the most wallet-friendly communities in Dubai
Source: S. Dhar, Special to Properties
The writer is a freelancer