A proposal by Dubai Municipality to force developers to meet affordable housing quotas in the emirate is “long overdue” and will bring benefits to the property market, according to Cluttons.
The real estate consultant said in its latest market outlook report for Dubai that the mandatory affordable homes quotas will also drive further maturity in the market.
The Cluttons Spring 2015 Dubai Residential Market Outlook report highlighted the move by Dubai Municipality which is aimed at those on monthly incomes of between AED4,000 ($1,089) and AED12,000.
“With these households being placed in a better position to control their rental outgoings, the speed at which deposits can be amassed will no doubt rise, therefore aiding property ownership aspirations,” the report said.
In March, Abdullah Rafia, assistant director-general of planning and engineering at Dubai Municipality, was quoted as saying that it has sent the proposal to Dubai’s Executive Council that would ensure that 15-20 percent of a developer’s project is aimed at lower earners.
Steve Morgan, chief executive at Cluttons Middle East, said: “The issue of affordability has been one that has been quietly bubbling away in the background for some time.
“With the introduction of the Federal Mortgage caps and the doubling of property registration fees, we saw genuine end users in the market forced into a holding pattern as they attempted to make the transition from rented accommodation to owner occupation.
“The surging rents, driven by the exceptionally strong underlying demand, which was linked to the robust economic growth, meant that household finances were coming under tremendous pressure on several fronts.”
He added: “The introduction of this asset class in Dubai is likely to bring a surge in institutional investor interest, especially if the affordable quotas are reasonably high.
“The creation of this new residential investment class should then pave the way for partnerships between local developers and large multinational finds, effectively catapulting the emirates real estate market to the next stage of its evolution,” said Morgan.
Affordability has been at the centre of the recent project launch by Nshama. Its Town Square development has marketed apartments for just over $95,000.
Follow us on
