The term affordable housing is something you will hear more often not only in Dubai but also in major urban areas globally. Though the term is easily enough understood, the methods of providing housing that is truly affordable in the long term is somewhat complex, with several challenges to overcome.
Insight from the National Intelligence Council report Global Trends 2030 — a forecast on major world events globally for the next 15 or so years — shows why affordable housing is likely to become more important in our everyday lives.
The world population is expected to reach 8.1 billion by this time, with an increase in the ageing population as a result of better quality lifestyles and health-care provisions, according to the report.
Through rapid migration and urbanisation (or people moving from rural to urban areas for work and resources), today’s urban population of about 50 per cent will reach 60 per cent, which translates to more than four billion city dwellers worldwide. Coupled with the estimated increase in the so-called middle class, we can expect huge requirements in housing that is both affordable and sustainable.
Another excellent report by McKinsey and Company, titled A Blueprint for Addressing the Global Housing Challenge, goes on to explain the issues with affordable housing. It predicts that city growth will struggle to keep up with the demand and that a third of urban dwellers, or about 1.6 billion people, could find it difficult to secure decent housing in the next ten years.
The main reason for this is the affordability gap: the difference between the cost of a housing unit that is of an acceptable standard and what households can afford to pay by using 30 per cent maximum of their income. The problem, especially for residents of Dubai, is reducing the cost of housing to a level that is actually affordable, while maintaining a good and long-lasting quality.
As a construction consultant, this presents an interesting challenge. While there are some factors including land cost and financing options that are beyond my influence, there are several key areas we advise developers to focus on in order to reduce the long-term cost of housing by 25-50 per cent — an effect we have previously delivered with success in the UK. The challenge is convincing them to implement these approaches in Dubai.
An area screaming out for improvement is sensibly reducing the construction cost. The big challenge is to move away from the traditional adversarial contracts between developer and contractor (we frequently advise on removing the FIDIC 1987 contract) into a more collaborative partnership approach, whereby profit shares for both parties act as an incentive to build housing developments both well and on time.
Another improvement related to building costs is to move away from traditional in-situ construction and instead embrace the cost, time and quality benefits of off-site construction. The latter is an industrial approach where partial or even whole domestic units are made under well-controlled factory conditions, rather than the chaos of a building site.
The second major area we target is maintenance and running costs. Bear in mind that affordability spans beyond the purchase agreement into running the property over time, and that for every one dirham spent in construction, we can find up to Dh50 spent on operating and maintaining a building over its lifetime.
Selecting the correct materials, plant and energy-efficient systems based on durability rather than low initial cost is key and should be transparently assessed through an appreciation of whole life costs. After all, once you buy the property you are left to foot the bill — let’s not make the mistake of assuming affordable housing means cheap, poor quality construction to maintain developer’s profit margins without addressing the wider issues.
— The writer is Head of Project and Building Consultancy at Cavendish Maxwell
