Mid-level wage earners account for a major portion of Dubai’s population – over 40% – and this mid-level income segment will be the key factor driving demand for building affordable housing in Dubai.
This asset class will most probably create waves in terms of institutional investor interest, particularly if affordable quotas are favorably high – in the 20% to 30% range of the total number of housing units built, for example.
What’s interesting is that the creation of this “residential investment class” will lead to new partnerships between major multinational finds and local developers, launching Dubai’s real estate market into the stratosphere.
What’s in Store for Us Then?
The Dubai Municipality has reserved several hectares in Muhaisnah 4 and Al Quoz 3 and 4 to allow developers to pursue affordable housing projects for tenants who fall in the 3,000-10,000 Dirham monthly range. More good news: plans are underway to issue a law that requires developers to direct 15-20% of their resources exclusively towards affordable housing.
Dubai Municipality’s proposal to introduce affordable housing quotas pertaining to all new residential developments has been overdue so to speak, and will lead to a plethora of benefits in the Dubai property market, as it further matures.
Until the end of this year, about 25,000 residential units are expected to grace the market and areas which border the city center – Jumeirah village, Dubai Sports City, International media Production Zone etc. – are slated to emerge as viable options for satisfying low-mid income groups.
In the villa market, a large amount of supply around Sheikh Zayed Road is set to provide many affordable options for those wanting to buy properties in Dubai, thanks to the increased activity from Dubailand on one side and Barsha South to Meydan, on the other.
Current State of Affairs
It appears the current Dubai property market has come to a stage where it is experiencing a general lack of space needed to build apartments in prime locations. Rest assured, supply will be coming in the shape of more affordable housing in locations such as the Green Community, while also involving areas from Dubai World Central.
It should be observed as expansion takes place in any city, affordable housing options often emerge on the outskirts of main commercial districts, which eventually merge with the city over the course of time. Hence, it is safe to assume that when you’re looking for affordable properties in Dubai, consider seeking residential units that are located on the outskirts of commercial areas or hubs as well as well-known residential ones.
Property experts believe the affordability issue in Dubai’s market is one that has been silently brewing in the background for quite a while now. After the Federal Mortgage caps were introduced and property registration fees doubled, the market saw many tenants attempting to become homeowners. These stiffer regulations lead to a market slowdown which signified affordability across all sectors, all the while instilling stability in the Dubai property market.
In the next 2 years, approximately 65,000 units are slated to enter the market, out of which apartments will be dominating nearly 80%, while villas will account for the rest.
Finding the right property can be a breeze if you rely on established real estate companies in Dubai, who have the tools, know-how and expertise to ensure you get the most value for your investment.