Dubai: While much of Dubai property’s ongoing upturn has been built on premium and super-luxury properties, the first sounding out of “affordable developments” are starting to be heard. Recently, a top official at Deyaar Properties confirmed that the lookout was on a for a location in Dubai to fit in such a project.
“An affordable property can be built in Dubai even in a market where plot values are going up… and it doesn’t mean the final product has to be of a lower quality to what is available in the market; nor does it mean low-cost,” said Saeed Al Qatami, the Deyaar CEO, said at the time. “There’s no denying there is an immediate need for affordable housing.”
While developers are still working on ways to go about it, in the marketplace anything that is rated as accessible is getting snapped up, both in the sales and rental spaces. “Rentals at International City and the high-rises that got delivered in Sharjah in the last two years have already seen the impact of tenants trying to find a place that will be within their budgets,” said John Stevens, managing director at Asteco, the property services firm. “Areas in Ajman farthest away from Dubai are now seeing non-occupancy levels well below 15 per cent against 50 per cent during the downturn.
“But there is also a realisation among some landlords at least that hiking rentals when salaries have not been rising in proportion is counter-productive.”
But are there enough landlords out there holding back from hiking rents to the optimum extent? According to the consultancy CBRE, secondary locations such as Sports City, International City and JLT (Jumeirah Lakes Towers) witnessed the highest rental increases. “Although lacking in some public amenities, demand in these areas has risen as investors and tenants become priced out of other areas in the city,” said Mohammad Faheem, senior research analyst at CBRE Middle East. “The year-on-year rental growth across residential properties measured 24 per cent, with apartments again contributing the bulk of this growth.”
Global Capital Partners (GCP), an investment group, has been giving serious thought to get into developing affordable homes in Dubai. To support its case, the company has been putting out numbers to show why. The Dubai Statistics Centre estimates reckon that only 13.5 per cent of the city’s population live in freehold areas. And as per the latest Land Department stats, just 1 in around 7 transactions are mortgage based.
“The incidence of mortgages that are occurring are at the higher end of the price spectrum, implying that for the most part the middle-class is still not participating in the “wealth effect” of rising prices,” said Sameer Lakhani, managing director at GCP. “On the contrary, with rising rents taking a larger percentage of their monthly budgets, many are being forced into Sharjah and Ajman.
“Dubai has already evolved housing schemes for the national population via the Mohammad Bin Rashid scheme — the goal was simple; allowing a wider base of the population to participate in the housing boom of the city and the country. Given its dependance on the expatriate population, a policy for the development of middle-class housing is also the need of the hour.”