Ian Albert of Colliers International says that mid-market properties that are suitable for working families or professionals are in high demand in the UAE.
Savvy investors with an eye on reliable returns could do well to look at snapping up mid-level properties, while property developers who focus on supplying more affordable housing will tap into a significant demand for this kind of real estate. That’s the conclusion of a report by Colliers International, a leader in international commercial real estate services. The report highlights a mismatch between supply and demand for ‘affordable housing’, and notes that such a ‘gap’ has repercussions for the growth of the country.
Says Ian Albert, Regional Director at the company: “When we talk about affordable housing, we are not referring to low-income housing, but housing that is affordable for a household in relation to its income. What this means in Dubai, is mid-market properties that are suitable for working families or professionals. Owing to the recent growth in rental and sales prices in Dubai, this segment has chosen to live in neighbouring emirates such as Sharjah and Ajman. This is a missed opportunity for Dubai developers who should be looking to capture this market by creating affordable communities that cater to its needs.” The study reveals that around half of Dubai households earn between AED9,000-15,000 per month, limiting affordable living options available in a market where property prices have risen sharply in the past.
“Although the rate of growth in the sales market has slowed, the average 2- or 3-bedroom unit in Dubai is still beyond the reach of most families. With ownership no longer an option, these families have been pushed towards renting, where prices remain high. This represents challenges for Dubai. As the cost of living becomes untenable for the average family, they may look to another emirate for accommodation and schooling, or even to more affordable countries in the Gulf or further afield,” says Albert.
The report asserts that when developed effectively, affordable housing can provide high returns; significant rental increases were witnessed in affordable locations in Dubai. Facilities, such as healthcare and leisure services, can increase the developer’s overall returns on a mid-market housing project.
“Access to affordable housing is not an issue that Dubai alone faces. Every major city in the world faces the same challenge. It offers huge potential, however, to be achieved it is critical that developers have access to well-located and serviced land. Only then will we see a policy for the development of mid-market housing come to fruition in Dubai,” – Ian Albert.