Affordable housing is projected to be the fastest growing segment within the United Arab Emirates’ (UAE) residential real estate market over the next five years, as developers capitalize on demand that has outpaced supply.
“I think affordable housing supports Dubai’s image as an attractive city for people to visit, work and live in,” Hesham Al Qassim, CEO of wasl Asset Management Group, told Argaam.
The government-backed company is preparing to bring 1,244 units to the market, through its subsidiary wasl properties’ latest project wasl oasis II in Dubai’s Muhaisnah area.
Al Qassim said the development has seen strong demand with the 548 units in Phase-1 leased out “within days of launch.”
A number of private developers– including Danube Properties, MAG 5 Property Development, Nshama and Dubai Properties– have also announced projects to fill the supply gap.
“You’re talking about 40,000 apartments required in the market each year until 2020. The deliveries that are there in the market are not more than 18,000 to 20,000 apartments,” said Rizwan Sajan, founder and chairman of Danube Group.
The company recently launched its AED 300 million Glamz Residence project in Dubai.
Fred Durie, CEO at Nshama, said more developers are looking to enter the affordable housing segment as it’s “only natural, given the strong demand for middle income housing.”
Nshama is developing Town Square, a neighborhood that will include 3,000 townhouses, 18,000 apartments along with retail, commercial and hospitality offerings. It will also plan to launch a new affordable lifestyle community through a joint venture with Mohammed bin Rashid Al Maktoum Foundation.
MAG 5 Property Development is also looking to start first phase of handover of MAG 5 Boulevard in Dubai South in 2018. The project, which has an estimated construction value of AED 700 million, will supply 1,172 units to the market.
However, there still remains a lack of clarity within the sector on what projects actually fall under the affordable category. According to industry experts, a housing unit must not account for more than 30 percent of low to mid-income individuals’ monthly salary to be labeled as affordable.
“Not all these projects are affordable by the whole market [standard], but the emphasis on the middle income sector is very welcoming news for buyers,” Craig Plumb, head of research (MENA) at JLL said.
“Many of the new developments are not only offering lower purchase prices, but are also offering more favorable payment terms, further increasing affordability,” he added.
Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com
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