The increasing development of affordable housing can provide strength to the UAE economy, according to the survey conducted by Borderless Access.
The poll was carried out among more than 500 executives and 83 per cent of them are positive that the businesses can be supported by affordability in residential and commercial properties for the short as well as long term.
As the UAE realty market weakened in last 2-3 years due to several reasons including outside shocks like Donald Trump elected as the President and Britain voted itself out of European Union, most of the developers have been little worried and contemplating on ways to boost UAE business growth. The government has already implemented few policies and programs to handle the situation.
According to the head of research and advisory at Chestertons Mena – Dima Isshak – even though there will be pros and cons of developing affordable houses, UAE developers must focus on the bright side of this implementation. It attracts more buyers to invest in their own properties enhancing the local economy as the more money will be circulated.
However on the negative aspect, expat visas are linked to employer sponsorships and people whose employment ends. They would have trouble paying the mortgage as often their bank account will be frozen in no time. The pressure will be on the homeowners as well as the financial institutions.
Some of the companies like Nakheel, Deyaar and Damac which are known for their luxury properties have already started investing on affordable housing projects showcasing the gradual shift in residential property market. 78 percent off-plan properties and 51 per cent apartments under construction have a price tag of less than Dh2 million and Dh1 million respectively, as confirmed by Sameer Lakhani, MD, Global Capital Partners.
In the period of last 2-3 years, Dubai market has seen a change in developers’ response on how to turn this top-heavy market into a profitable one. New communities have been created on the low cost lands in the city shoreline which attracts families. The buyers now can see the actual price instead of payment plans that reduces a lot of ambiguity. Moreover, affordable homes are more beneficial for investors as it offers high rental yields.
With all the developers’ recent focus on affordable housing, there will be much larger extent of supply than the demand which means that owners’ associations have to face the prospect of imposing high service charges to cover costs. Reportedly, 20,000 affordable properties with 90 per cent apartments will come to the market in next 12 months.