By Beatrice Thomas
Population growth, regional immigration to Dubai and the effect of Expo2020 are set to generate demand
Dubai “urgently” needs more than 260,000 new affordable homes to be built over the next six years, according to new research that has thrown the spotlight on the emirate’s housing sector.
The research, commissioned by urban design consultancy Placemaking, found that currently about 50,000 new units were being added to Dubai’s housing stock each year across all price levels, with about 375,000 units added to the market between 2003 and 2013 and 20,000 more estimated for 2014.
However, Placemaking founder, Nadine Bitar, said three feeders – population growth, regional immigration to Dubai and the effect of Expo2020 – meant more than 500,000 new units were needed between now and 2020.
She said of those an estimated 264,000 needed to be “affordable”, which she defined as costing AED45,000-60,000 ($12,251-16,335) a year in rent.
“Affordable housing is a large market potential as our numbers justify it,” she told Arabian Business following her participation on a panel at the Urban Agenda 2020 Conference in Dubai.
Bitar, who previously worked on the Dubailand project before setting up her own consultancy, said a number of factors had contributed to the current construction rate and price of houses in Dubai, with market demand before the 2008 financial crisis leading to more stock in the upper end.
However, she noted “it’s not a Dubai syndrome, it’s a worldwide syndrome”, with developers both seeking a return on their investment and meeting present-day market demand.
Bitar said possible solutions to boost the number of affordable homes included specific zoning to ensure a percentage of units were dedicated to affordable housing, as well as other incentives such as dispensation on parking bay numbers and an increase in plot ratio.
She said on the financing side, lower interest rate loans through banks or the government for these type of projects was another possible incentive.
“We need at least at the beginning incentives to encourage developers not only to build the units, like, for example The Greens by Emaar, or International City by Nakheel or the Gardens, but we need also to encourage them to manage it in a way that stays affordable,” she said.
A high-level multi-agency government committee similar to one created to progress the Dubai smart city concept should be established to tackle the issue, she said.
“I do believe if we catch up with the demand things will be a lot smoother for everyone,” she said.
The mentioned lease rates would be considered Studios or at best 1 bedroom rentals. In a few years these may be Sharjah prices. I would be surprised if these are ever Dubai prices in well-managed properties.
Instead I believe there needs to be a push to develop Ajman and this becomes the low cost alternative. Yes, there is the drive back and forth every day but with the new Emirates Road the drive should be less "painful" than the current drive for many Sharjah residents who suffer from a lack of internal roads (as a result of poor government planning!) and much congestion. I don't think developing Ajman can be left to their government. This needs both Federal and Dubai help to make it happen.