Affordable property in Dubai - Is there a need ?
At Exclusive Links Real Estate we agree the lack of affordable housing across all areas of Dubai is not only causing great concern but is indeed now forcing tenants to consider neighboring emirates such as Sharjah and Ajman. Growth population and Dubai�s young age profile needs to see more houses in the lower segment of the market.
During 2013 we saw apartment rents increase by an average of 30% and as high as 45% over the past 2 years. Emerging markets such as Dubai Sports City, Jumeirah Village, IMPZ and Silicon Oasis along with the well-known Discovery Gardens and International City are very quickly becoming unaffordable for the budget conscious resident.
If you are looking to purchase more affordable property in Dubai then both International City & Discovery Gardens which were locations predominantly launched to offer �affordable housing� and are now priced in excess of AED 700 per sqft and therefore can they really be included as affordable!
"Cheaper housing options provide developers with lower returns so
they continue to compete and deliver in the high end segment."
There are no minimal salary provisions in U.A.E and monthly salaries can range from AED 1,000 to AED 90,000. The average is estimated between AED 13,000 to AED 18,000 per month. Any families or couples relocating to Dubai would need between AED 10,000 - AED 15,000 per month to afford cost of living and housing.
Based on salary of AED 15,000 per month to purchase a property at the value of AED 800,000 with 25% down payment over a 15 year period you would require 30% of your monthly salary towards monthly mortgage repayments. You can acquire mortgages for longer term in range of 20 to 25 years and loan up to 50% of your monthly income but in order to provide a realistic affordable bracket we feel this would be categorized as properties with value of AED 600 per sqft or less to purchase and AED 45 per sqft to lease.
Prices are driven by the market demand & supply and the shortage of supply is under further pressure with the expectation that 260,000 new affordable units will need to be available & delivered in the lead up to Dubai Expo 2020.
To avoid creating �ghetto communities� these issues need to be addressed and it seems that the housing requirements of a large segment of the work force are being overlooked. Access to affordable housing is a basic human right and need.
Cheaper housing options provide developers with lower returns so they continue to compete and deliver in the high end segment. The desire to deliver the biggest and the best coupled with high land prices does not make financial or competitive sense for developers to cater to this cheaper market.
In saying that market leaders Emaar have recently launched a new wholly-owned subsidiary, Dawahi Development, to drive value housing projects for mid income expatriates. The newly launched Nshama Development located adjacent to Emirates Road offers prices starting from AED 999,998/- for 3 bedroom townhouses and creating a welcomed new diversity to this market segment which we hope other developers will follow.
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