Lower down payment and innovative financing schemes can help attract buyers to the “affordable” housing segment in Dubai’s property market, believes a real estate consultancy.
“Property markets across the world are driven by ‘end-users’ or ‘middle class’. Low down payment requirements, job security and social security provisions have created necessary infrastructure for home ownership in most economically developed nations,” states Simon Gray, Managing Director, Chestertons Mena.
“Lower down payments definitely allow end-users to enter the market and secure long-term commitment. UAE can also benefit tremendously by introducing attractive propositions for this segment as majority of the residents can look at owning a property and create a sustainable market proposition.”
The UAE has a mortgage cap in place with first-time buyers having to pay 25 per cent down payment while when buying a second property the down payment is set at 35 per cent.
‘Emirates 24|7’ reported earlier that Dubai Properties and Danube Properties had launched projects in the affordable housing segment. Besides, Dubai Municipality has also allocated 10,000 residential units in its Dh30-billion Desert Rose master development for affordable housing for expatriates.
Though what constitutes affordable in Dubai is not explained, Simon puts properties in the price range of Dh400 to Dh600 per square foot in the “affordable” category.
He believes there has been a significant change in the perception of developers with respect to the end-users.
“Many developers are readjusting their portfolios to meet the end-user demand. However, targeting the end-user presents a couple of challenges for the developers. Supply of affordable units is another issue in the market.”
According to Robin Teh, Country Manager, Chestertons, a small percentage of the resident population can afford mortgages in Dubai, which is quite a challenge for long-term sustainability of the market.
“There is clearly an issue with demand here, which is severely hampered due to regulatory policies. High down-payment requirement make most properties unaffordable for expats, which would otherwise be perfectly affordable.
“Affordable market could be an answer to demand stagnation and thereby encourage genuine buyers to enter the market; however, it would also require strategic changes in regulatory and legal infrastructure as well,” he adds.