Affordable housing still severely lacking

As prices of property in Dubai continue to escalate, it is becoming increasingly challenging for people living here to take that all important first step on the property ladder. While some have managed to make a tidy sum from real estate investments here, those who haven't yet been able to take the plunge into property ownership are now faced with rising entry rates.

When talking about affordable housing, a level of clarification is required as, what is deemed affordable by one person may be nothing more than a drop in the ocean to another. For the purpose of this article, I am talking about what is affordable to those in the lower to middle income brackets.

The high demand for available accommodation to rent and buy in Dubai has forced prices up over the last few years and, as a result, people on lower wages have been left with very few options when it comes to finding a place to live. Many are being forced to share apartments with friends as there simply isn't enough stock available in their price range.

As with any city, in order to function, Dubai needs to be able to attract people to work here at all levels of the income spectrum and it is a concern that the current rates may price certain income brackets out of the market completely. A trend for developing high-end luxury apartments and villas has fuelled the current void in available properties. With an increasing number of people relocating to Dubai and much less construction under way at the lower end of the market, demand is likely to remain high for some time to come.

Understandably, when undertaking a project, a developer's primary concern is their bottomline and the reality is that constructing higher-end projects generates a more attractive level of return for them. In the last few years, the price of land has skyrocketed and whether building a five-star luxury tower or budget accommodation, the price of land does not differ and therefore, in order to maximise profits, developers opt for the project that will generate greater profits.

There have been some freehold projects which targeted middle- to lower-income earners including International City and the recently handed over Discovery Gardens. However, the completion of such units didn't bring as much relief as we had expected, and because of the current conditions within the market, where we have seen an unprecedented level of demand, landlords are able to command much higher rents than had previously been anticipated, which has put these properties out of the financial reach of some people.

Framework

So what exactly can be done about the current lack of provision in this pricing tier? It's not an easy problem to solve although in some countries there are regulations in place to ensure a certain percentage of the building permits issued are allocated to the development of affordable housing. Perhaps a similar type of scheme could be implemented here. Indeed, I believe that the Dubai Urban Development Framework, which dictates urban development up to 2020, will address the decline in affordable housing over recent years.

At present, it's true that the majority of developments target high-income buyers but in time, as the supply and demand evens out in that segment, the developers are likely to diversify their offerings slightly and focus more on where the demand remains high. Dubai already has so many things that people in other cities can only dream of, but in order to create that real fairy tale ending it is important to ensure all residents can afford a place to call home.

The writer is managing director of Better Homes.