By Rizwan Sajan
After largely ignoring the lower property segment, developers and investors are realising its potential
While Dubai’s affordable housing sector has been gaining momentum over the past few years, 2016 saw a number of changes globally that affected the Dubai market. But despite the global downturn, the affordable housing sector fared comparatively well and is moving towards stronger growth in the year 2017, with prices set to increase in the near future.
Previously developers across the UAE primarily focussed on catering to the luxury segment, but of late developers are realising the true potential of this untapped sector and are seen to be diving in.
In general, the affordable housing market in Dubai is undersupplied, which explains the current demand.
Other factors making it attractive for investors are the payment plans, financing solutions offered by banks and other institutions, as well as the want to own an apartment in Dubai over renting in other emirates.
We have seen that many buyers are often end-users and are willing to commit to owning properties in good locations. The price of land has increased by about 30 percent in the last few months alone, which in turn will affect developers’ ability to offer lower rates to customers. For instance, a piece of land purchased in Al Furjan, which costs AED110 per square foot, is now costing anything between AED140 and AED160 per square foot.
Therefore, it is safe to say that this is the best time to buy property as the prices offered today will not be the same tomorrow.
While we live in a volatile region, with fluctuations in oil prices and social disrupt, the countries in the MENA region still offer the highest growth opportunities for numerous businesses. Even though the market confidence seems to be affected temporarily, Dubai’s regulatory reforms and increased maturity indicate that the market is undergoing a correction.
In 2006, the property market was moving in an unrealistic way and witnessed a downturn soon after. However, post-2008, a number of policies have been put in place to not only keep a check on developers but also to monitor buyers.
The Real Estate Regulatory Agency (RERA), has established mortgage caps, compulsory monitoring of marketing collaterals and other valuable services, further shaping the confidence of buyers in the region.
Another important factor that will influence the property market in the next few years is the gear up to the Expo 2020. Soon after the announcement, we noticed a significant boom in the property sector appreciating the value of property until the Expo 2020 and beyond.
The Dubai government is investing tremendously in infrastructure, which in turn will drive the market conditions and encourage more people to spend, in addition to attracting more foreign investment. Moreover, the rise in the number of projects has boosted the growth of ancillary businesses such as building materials as well as facilities management.
The year 2017 will be monumental for the affordable property sector as it is expected to grow exponentially and will not only convert renters to owners but will also continue to attract more investors from in and around the region. Under the visionary guidance of our leaders, the UAE will continue to develop as a state-of-the-art country for innovation and growth.
Rizwan Sajan, founder and chairman of Danube Group