Over the past few years, the term “affordable housing” has gained popularity and become increasingly common in the media and professional lingo. We want to say this outright – many do not fully understand the concept of accessibility entirely. Furthermore, someone doesn’t just know where accessibility starts and ends.
In today’s article, we discuss the issues related to affordable housing and the term “accessibility”.
Currently, Dubai is experiencing an increase in the construction of 3-4-star restaurants and hotels, rents are reducing by 20-25%, and property prices decreased by 30-40% and are only now beginning to stabilize. In general, everything has become cheaper.
Worldwide, people spend an average of 30-33% of their time in their homes. At the same time, decision-making around housing began to weaken – everyone wants the economic benefits of having housing, accessing the comfort of having a home, as well as the level of security of the country of its location.
The main question is whether it really makes sense to single this out in a separate category given the general decline in property prices.
Dubai gave the green light to a low-income housing policy. However, the UAE government has not yet officially determined what “affordable” is.
According to a 2018 Deloitte report, “In Dubai, rent or mortgage payments are considered affordable if they are less than 9,300 UAE dirhams per month – or approximately 112,000 UAE dirhams per year.”
Statistics show that the current average sale price for a studio apartment in Dubai is 670,000 UAE dirhams but prices vary greatly. For example, a 1-bedroom apartment in Jumeirah Lake Towers can cost 675,000 UAE dirhams. But the same real estate in International City will cost half the price.
Given that the average wage is AED 16,775, the cost of living is relatively high, and there is a transitional international population, is this amount really affordable?
According to a number of real estate experts, more developments are needed with restrictions on sales for 2-3 years after completion. Some examples are Discovery Gardens or one step higher in quality between Discovery Gardens and JLT. Thus, they will be purchased by the actual final users. This will open up the lending market and charge foreign lenders for real estate.
According to a global estimate of statistics, between 2015 and 2019, real estate prices fell by 30-40%. And while the outlook is far less bleak today, Deloitte’s 2018 report also shows that by November 2017, “Dubai’s residential property market had shrunk by an average of about 15% from its peak in the third quarter of 2014.”
This raises a logical question – if real estate prices have somehow declined, does it make sense to develop a wide range of new “affordable” housing?
Will less expensive housing really affect the total number of owners?
For those who come to Dubai for a short time, as a rule, there is no urgent need for accommodation. Those who think about long-term living or investing are often targeted by the premium or super-premium sector.
According to the Deloitte report, developers also choose high-end projects due to higher margins: “The margins in real estate development in Dubai are generally low compared to other industries.” Therefore, they have little incentive to build cheap housing.
This brings us to the most important point – quality. This is something that has and always will be a priority. The demand for a property with fewer square meters is high – as long as it is well located, offers access to popular amenities, and is built by reputable developers.
Instead of treating affordable housing as a panacea, developers still need to pay special attention to the specific needs of buyers and their values.
Despite the abundance of luxury real estate here, the cost of buying a standard middle-class home in Dubai is still extremely affordable unlike many other major cities around the world.
Hong Kong remains the most expensive city in the world to buy real estate. In Europe, these are Munich, Amsterdam, and London. In the US, New York and San Francisco remain the most expensive markets.
Compared to other leading cities in the world, Dubai is surprisingly affordable given the quality of life it offers.
Therefore, the availability issue remains rather ambiguous.