The UAE's affordable property sector is set to grow in 2018
Affordable real estate has witnessed notable growth and investments in 2017, and the continuation of these efforts will boost the UAE’s property market next year
Affordable real estate has witnessed notable growth and investments in 2017, and the continuation of these efforts will boost the UAE’s property market next year.
In addition to the commencement or completion of numerous luxury residential projects across the UAE, this year has also seen a regional movement towards – and a new-found appreciation of – affordable real estate.
The impact of low oil prices, and the upcoming implementation of value-added tax (VAT), have been noted in the Gulf’s development and construction sectors. Consequently, a market rationalisation has been underway in the regional development market this year, paving the way for affordable construction projects to take hold in key geographies, such as the UAE.
Indeed, it is likely that the region’s busiest market in terms of mid-market projects is the UAE, where recently released data shows that up to 60% of developers from Dubai alone are participating in the affordable property segment. This October, Aqarat Dubai, a home finance website in the UAE, said that as of Q3 2017, “about 60% of top Dubai developers” had launched projects with affordable unit options, priced within the range of $109,000 and $190,600 (AED400,0000 and AED700,000).
Indeed, some of Dubai’s top developers are setting long-term plans to build in neighbourhoods that typically witness high demand for affordable units.
For instance, last month, Al Ghurair Properties revealed that its development plan, worth $1.36bn (AED5bn), included localities such as Deira, Bur Dubai, Al Barsha, and Al Qusais. Due to be completed by 2020, these developments comprise 58 buildings featuring 8,000 residences and 3.25ha of retail space.
Meanwhile, over in the UAE’s capital city, Aldar Properties launched its first mid-market project for Abu Dhabi this April – The Bridges, worth $350m (AED1.3bn). The development has been designed to meet “the significant demand for high-quality – yet affordable – homes in prime investment zone destinations across Abu Dhabi”, Mohamed Khalifa Al Mubarak, chief executive officer of Aldar Properties, commented.
However, investments in affordable real estate are neither exclusive to the private sector, nor a recent trend. In an interview with Arabian Business in July 2016, Dubai Land Department’s (DLD) director-general, Sultan Butti Bin Mejren, said the agency was working with the Department of Economic Development (DED) and Dubai Municipality (DM) on a study that would cover topics such as developer incentives and buyer financing for affordable real estate.
The latter will continue to be a key topic of discussion for the emirate’s affordable real estate developers going forward. For example, the group of Aqarat Dubai’s users that earns between $2,700 and $4,100 (AED10,000 and AED15,000) per month “usually faces difficulties associated with the eligibility criteria [...] and the ability to generate [a] down payment” that are required to secure mortgage products.
The affordable segment is a significant opportunity for builders and buyers alike, and initiatives by the region’s public and private sectors look set to buoy the sector in 2018.