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Demand for low cost residential units in affordable areas is expected to continue to rise in Dubai despite new stock of around 51,000 units entering the market by the year 2020.
A recent study by Colliers International has revealed that approximately 50 per cent of the forthcoming projects are targeted towards the upper-mid and higher-end of the market located in areas such as Business Bay, Dubai Marina, The Villa in Dubailand, Dubai Culture Village and Palm Jumeirah. This will mean that rental rates in affordable areas like International City and Discovery Gardens will see a rise.
Currently, the monthly income of around 50 per cent of Dubai's households is between Dh9,000 and Dh15,000 per month. According to economists, around 30 per cent of the annual income should be spent on housing. Therefore, these households can afford an annual rent of Dh32,500 and Dh54,000 per annum.
The only residential areas in Dubai where houses are available in this range are International City, Deira, Qusais and Al Nahda. But even in these districts, only studio units and one-bedroom houses are available within this price bracket. This means that households with bigger families are being priced out. The availability of more affordable options in Sharjah means around 1 million people commute to Dubai from Sharjah daily.
In the neighboring Abu Dhabi where rents are higher, surveys conducted by Statistics Centre - Abu Dhabi have revealed that households spend around 37 per cent of their income on rents. An additional 47,900 housing units are due to enter the market in the next three years, representing an annual increase of 3.6 per cent. Despite the increase in supply, high population growth rates of 5.5 per cent per annum combined with declining household sizes are expected to maintain an undersupplied residential market. The affordable housing locations in the capital include Mohammed Bin Zayed City, Al Markaziya and Al Zahiyah (formerly known as Tourist Club Area) where annual rents for one-bedroom units are at around Dh50,000 to Dh55,000.
For an expatriate in the UAE, the minimum monthly salary should be Dh15,000 to be eligible for mortgages to buy a residential property.
• The demand for affordable housing is expected to continue to rise in Dubai
• International City, Deira, Ghusais and Al Nahda are affordable areas in Dubai
• MBZ City, Al Markaziya and Al Zahiyah are affordable locations in Abu Dhabi
Source: S. Dhar, Special to Properties
The writer is a freelancer