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Is PPP the key to affordable housing in the Gulf?

If the Middle East is serious about sustainability, its public and private sectors must work together to drive the creation of social and affordable housing for lower-income citizens

COMMENT, Projects

This week, the founder of Lifestyle Developers speaks to Construction Week about his endeavours within Saudi Arabia’s residential sector. Sultan Batterjee is passionate about turning home-ownership into a genuine possibility for middle-income professionals, both in the Kingdom and across the wider region.

Batterjee has spent the last few years proving his early detractors wrong, demonstrating that it is possible to deliver high-quality apartments at affordable prices, all the while retaining commercial viability. His achievements to date are impressive, and his passion clear to see, yet I find one section of his interview particularly revealing.

Whilst detailing the thought process that led to his identification of the middle-income market, Batterjee explains why he decided to steer clear of the lower-paid bracket. “There is probably something to be done [within the low-income segment],” he says, “but I cannot compete with the government or match its pricing.”

Batterjee is right. There exists a real need for social and affordable housing across the Middle East, but as oil-price stagnation continues, who is going to meet this demand? Faced with significantly reduced incomes, regional governments are looking to rein in public spending. Meanwhile, the dearth of inexpensive housing in major hubs like Dubai appears to be forcing expats to explore cheaper – but farther-flung – options.

High rents and property prices might result in immediate gains for real estate investors, but insufficient affordable housing – and the strain that residential gentrification places on infrastructure – cannot be weathered over the longer term.

Sustainability depends on economic and social factors just as much as environmental aspects. If a society is to become truly sustainable, affordable housing is essential.

As analysts predict the continuation of low oil prices into 2016 and beyond, local governments are looking to diversify their economies. Now is the perfect time to find creative ways to transform social and affordable housing into a lucrative, yet socially beneficial, market segment.

Encouragingly, this is already happening – or at least, it is beginning to happen. Public-private partnership (PPP) projects are on the rise in the Middle East, and although largely focused on social infrastructure, there have been forays into the residential sector. The Bahrain Affordable Housing PPP, for example, entails the construction of 3,110 social housing units, and more than 1,000 affordable homes for low-income citizens. The country’s Ministry of Housing has already confirmed that it will pursue private investment for similar projects in the future.

I for one hope that this model proves successful. If PPP is able to drive the creation of both social and affordable homes, it may well be the key to sustainable housing for the region. It would also serve to eliminate the obstacle mentioned by Batterjee.

Because ultimately, sustainable housing in the Middle East will be forged in a climate of collaboration, not competition.

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Construction Week Middle East 11th Jan 2020
Jan 16, 2020