Home / Housing benefits
Housing benefitsby Michael Fahy on Jan 23, 2013
Demographic changes mean the region is facing a groundswell of demand for homes for lower-income families. Mike Fahy speaks to the man leading a huge affordable housing scheme in Egypt discusses the challenges in meeting this
The changing nature of family units in the GCC and across the wider MENA region is sparking an unprecedented demand for new housing. Rapid population growth coupled with smaller family unit sizes and increasing wealth is creating a demand which has seen housing prices rise beyond the reach of many nationals.
In Saudi Arabia, for instance, a recent report by National Commercial Bank suggests that demand for new homes is likely to rise from 195,000 per year in 2011 to 264,000 units per year by 2020.
Already, there is a problem with affordability as demand has pushed the average house price to $144,800 - 7.6 times the current average Saudi salary of $18,851.
“The demand for housing, especially affordable units, continues to grow at a rapid pace,” NCB’s report said.
“The continued migration to the Kingdom’s three main regions of Makkah, Riyadh and Eastern Province has been exerting pressure on property developers and banks to provide the necessary facilities to accommodate such shifts.
“In addition, the younger age demographic, which represents the largest segment of the population, besides generating additional demand as they enter the marrying age, are gradually breaking from the extended family lifestyle.”
The fact that there is such a pent-up demand for housing is beyond doubt. The problem, according to Orascom Housing communities’ managing director, Omar Elhitamy, is in creating the right conditions to ensure supply.
His company, a spin-off from the huge Egyptian contractor Orascom Construction Industries (OCI), was set up in 2007 with a view to addressing this problem by developing a model for large-scale affordable housing cities that can be applied across the MENA region.
Initially, Orascom Housing Communities was a partnership between OCI and Mexican company Homex - an affordable housing specialist with sales of $1.5bn a year.
The company is now 70%-owned by OCI, and the remaining 30% is held by two US-based real estate investment funds, Equity International (17%) and Blue Ridge Capital (13%).
The company started work on Haram City - a project spread across 8.4m m2 of land that will eventually contain up to 70,000 homes for 300,000 people - in May 2007.
The project has been built from scratch as a fully-integrated town with its own water, sewage and electricity infrastructure. Elhitamy said the company recognises this is important to governments that need housing in areas where there is no existing infrastructure.
Article continues on next page ...
- RAK Ceramics posts 43% rise in Q3 2015 net profit
- UAE's Arkan posts 32% rise in 9M 2015 net profit
- Dubai emerges as a global hub: Knight Frank
- Eaton names new channels head for the Middle East
- DSI & du sign business communication agreement
- Bahrain to award $400m contract for gas terminal
- India's Gemini Energy forays into UAE real estate
- Qatar prepared for UN climate change conference
- Technology key for sustainability
- Dubai Holding's arm posts 24% rise in H1 profits