Dubai may finally offer residents affordable housing, which is currently extremely limited segment of the real estate market in the emirate. In the near future, developers may be forced to follow a legislation that will potentially introduce quotas for affordable properties. Amidst surging rents in the past few years, affordable housing may be finally available. But is it a reality or it is just not possible?
Currently, the lowest prices for property in Dubai are around AED 700 per sq. foot, which for most average households isn’t very affordable. The option is to rent a smaller apartment in the city, or to relocate at the Northern Emirates, where rents are several times lower, and to travel to Dubai every morning. Many residents have chosen this alternative, because of the rent rates, which have jumped more than 50% in the last two years. Affordable apartments and houses are really hard to find, while the demand is extremely high, creating a huge gap in the local property market. But Dubai Municipality may have a solution to the problem – it plans to introduce housing quotas for all residential developments. According to reports, the legislation has already been proposed to Dubai’s Executive Council. If introduced, it will require 15-20% of the development project to be in the affordable category.
For many people it means they will be able to live closer to their workplace, without having to travel every day to and from work. But establishing affordable housing won’t be an easy task with the increasing value of land in Dubai and constant hikes in prices for everything. There are accessible neighborhoods in Dubai such as Karama and Satwa. But if you ask anyone who lives there, they will tell you rents are actually high for them. There is no balance between rents and incomes and what is seen as “affordable” may be actually quite expensive for many residents. But there are many projects, promising lower prices. Units in Dubai Investments Park could cost around AED 600 per sq. f. However, this is still not seen as really affordable.
Another project, called Town Square will offer prices in the range AED 400-500 per sq. f., which will probably make a difference. This means you can purchase a 2,150 square feet townhouse for less than AED 1 million. Of course, value is always determined not only by the area, but also factors such as location, building quality, amenities, and so on. But on average, this seems like the most affordable alternative. We should also mention that the units will be sold off-plan, with the first phase expected to be open in 2017.
In fact, off-plan properties are currently the most affordable, although they come with potential risks. But as the real estate market in Dubai is stabilizing, no huge disturbances are expected. Purchasing your residence off-plan is safe, affordable and it allows you to plan your activity for the next several years – dealing with current lease contract, rethinking your job position and income, and finding a school for your children. So, yes, affordable housing in Dubai may become a reality, but not tomorrow – it may take a little longer.