By Claire Ferris-Lay
Mohamed Alabbar says Dubai has gap for homes from AED500,000, despite glutted market
Emaar Properties, developer of the world’s tallest building, is in talks with several UAE emirates to roll out affordable housing schemes and plans to concentrate on Dubai first, its chairman said.
Despite a housing market that is widely seen as being oversupplied, Mohamed Alabbar said Dubai still has room for properties at a price point of around AED500,000 (about $136,000).
“We're talking to a few emirates. I'm going to focus on Dubai to start with,” he said on the sidelines of the Arabian Business Achievement Awards on Sunday night.
“We are talking about [property] of maybe AED550,000 for someone with an income level of around AED12,000 a month.
Emaar in October said it was switching its focus to affordable housing in a bid to capitalise on government housing schemes aimed at addressing the region's chronic housing shortfall.
The Dubai-listed developer launched a division to build value housing across the Middle East and North Africa, opening up a potentially lucrative new revenue stream.
“Value housing in the UAE is needed, value housing in Saudi Arabia is needed, Kuwait [but] more in Egypt. But value housing in the UAE is a completely different concept,” said Alabbar.
The cost range for properties in the wealthy Gulf state will be higher than those in comparatively poorer Arab states such as Egypt, he said.
“Value housing in the UAE is a market… will be between AED400,000 up to AED1m. You have to create another category [for value housing here].”
Dubai was hit hard by the global economic downturn, which saw house prices fall decline over 60 percent from their 2008-peaks. In the wake of the economic crisis, many regional developers have latched on to midmarket housing in a bid to fill the gap left by the collapse of the emirate’s housing bubble.
The Middle East and North Africa has an estimated affordable housing shortfall of 3.5 million with nearly half in Egypt, Jones Lang LaSalle said in September.
High land prices coupled with the cost of infrastructure, limited home finance to low-income households and poor financial returns have all contributed to the region's severe shortfall in midmarket housing, the consultancy said.
Iraq has the second largest shortfall of affordable housing (1 million) in the region followed by Morocco (600,000), said JLS. Saudi Arabia, the wealthiest Gulf state, has the greatest need in the Gulf compared to 40,000 homes in Bahrain, 20,000 in the UAE and 15,000 in Oman.
Several Gulf states have pledged to ramp up spending on housing in the wake of the Arab Spring revolutions, in a bid to secure quality housing for their growing populations.
Saudi Arabia has promised to spend $130bn on social projects such as building new houses and creating jobs, while King Abdullah in March pledged to spend $67bn on 500,000 new homes.
Bahrain and Egypt are also pushing to meet the shortfall following widespread unrest in the Gulf Arab state and an uprising that topped former Egyptian president Hosni Mubarak in March.
In April, Abu Dhabi awarded a AED21bn ($5.7bn) contract to state-linked firms to build housing for the local population. It has said it wants to provide "adequate and modern housing" for citizens "to help achieve social stability"
Yes you are right there is a shortage of low income housing in Dubai. But low income in Dubai is defined as someone earning less then 5,000 Dhs a month. It is also the income bracket the majority of residents in DUbai fall into. Yet there is zero housing available for this income bracket unless it's shared or purpose built staff accomodation. 12,000 is on the verge of Medium Low to Medium high income bracket, and is where the biggest housing oversupply exists -we are talking Dubailand/Jumeirah Village/Discovery Gardens etc. Great idea but maybe do some research into the market as to what low cost housing is about. Then realise that low income housing in Dubai is not sustainable without government intervention as the cost to build is higher then any appreciable returns. Which is exactly what Abu Dhabi has done.
Mr. Alabbar, Please DON'T build anymore real estate !!!
As it is the market is hugely oversupplied. If at all, please get EMAAR to take over the stalled but viable, and semi finished projects and complete those first.
This will help the stuck investors, third party developers and build trust amongst everyone. It will also utilize the resources already stuck in these projects and take them to productive use.
The last thing Dubai real estate needs for the next 4 years is more CONSTRUCTION !
Yes indeed there is bags of room left for affordable housing in Dubai, because of earnings bracket that the dominant proportion of the population fall into and the fact that property in the emirate is still way overpriced for the majority even at 70% below 2008's peak.
Yes also let Emaar build them for they have been the backbone of residential in Dubai, they are a developer and it seems they cannot grow merely through hospitality and retail revenues so back to housing.
However, a word of warning, whatever anybody says we are a heavily oversupplied market and still delivering. So add a large swathe of AED 500k and below properties, then an even bigger chunk of the present stock will stand empty and unsold with little prospect of a transaction unless it's down to 85% and more off the 2008 high. There's almost a logic to setting that asking price ahead of time.
At last someone with a foresite and initiative to acter for those who cater for the wealthy.
Give your workers comfort dignity and they will work for you much efficently.
This plan will also open the untapped market and create opportunities for all, and even kick start the property market.
Sadly it will not give the required boost for those High Value stalled properies, this can only happen by statutory regulations forcing the developers to meet their obligations.
Bearing in mind that many people bught at 3rd or 4th tier, paying high premium for properties that were worth much less when launched..
I recall seeing an article in around 2005 discussing the building of several hundred villas for locals. It worked out around 30,000 USD per villa in costs from what I recall. And I would assume reasonable fit and finish.
Building costs in the UAE are actually very low, the labour is cheap, and low rise does not need much in the way of complex machinery or expensive engineers like 100 storey towers do.
I do not understand why this seems to be such an outstanding development. Dubai is full of sub 500,000AED properties for sale. They are likely to be for sale for a while, given the lack of available finance in the UAE market, the two year visa and of course that fact that whoever buys there will not be eligible for visas as they are priced under the magical one million AED figure.
The problem is the the sub 500,000 dhms are not worth even 50,000 dhms in the eyes of potential buyers.
He's talking about other Emirates. An advice: go to Ajman and finish Emirates City. There is plenty of half finished housing worth less than 250 000 AED per unit.
i agree with Jag , there are so many investors lamenting about the money they lost here .The land lying vacant in Business bay by developers like ACI should be used , give people who have lost millions something back rather than saying RERA will handle with the developer and get back to you . some of us middle class people lost our hard earned money in that i am sure even if we get back a 500 k flat for what ever we lost it will be some relief .Pls clear the back log honestly