Affordable housing project announcements have recorded a steady increase since Dubai’s successful bid for Expo 2020 was announced in November 2013, and governments in the Middle East have begun responding to the demand for inexpensive homes.
Craig Plumb, head of research for the MENA region at Jones Lang LaSalle (JLL) told Construction Week: “Governments across the region recognise the lack of affordable housing has both social and economic consequences.”
“The largest projects in this area to date have been in Egypt, where Arabtec Construction has teamed up with the national army to deliver one million new homes, and in Saudi Arabia, where the new king has taken a number of steps to ensure the delivery of more affordable housing for locals,” he added.
Arabtec last year agreed a $40bn deal with Egyptian authorities to build one million homes and asked contractors from both Egypt and the UAE to pre-register for the chance to build some of the units.
In October 2014, the Dubai-based contractor said it would commence construction work in three cities – Obour, Badr and New Minia – and involve the initial construction of up to 120,000 homes within integrated cities containing schools, hospitals and places of worship by the end of the year.
The project was delayed due to disagreements between Arabtec and Egypt’s ministry for housing, following which fresh agreements had to be drawn up between the two, Reuters reported. It remains unclear how the two parties will proceed with construction plans for the remaining 880,000 units.
“Arabtec’s involvement with the Egyptian army highlights another trend within the construction sector at the present time – the increased use of regional capital and expertise to deliver projects across the territory,” Plumb said.
“A good example of this trend is Eagle Hills, a newly formed Abu Dhabi-based company which is carrying out a number of major development projects in Egypt, Bahrain and further afield in Europe and Africa.”
Driven by government and private sector project announcements, the UAE continues to be the most active proponent of affordable housing within the region.
In March 2015, Dubai Municipality proposed to introduce mandatory affordable housing quotas for all new residential developments in Dubai. Steven Morgan, CEO of Cluttons Middle East at the time remarked affordable housing units could encourage increased property purchases by current renters.
“The issue of affordability has been one that has been quietly bubbling away in the background for some time. With the introduction of the Federal Mortgage caps and the doubling of property registration fees, we saw genuine end users in the market forced into a holding pattern as they attempted to make the transition from rented accommodation to owner occupation,” Morgan said.
“The surging rents, driven by the exceptionally strong underlying demand, which was linked to the robust economic growth, meant that household finances were coming under tremendous pressure on several fronts.
“Now, of course, with rents starting to show greater stability, households have a window of opportunity to consolidate their finances and make that leap to owner occupation,” Morgan added.
