Earning Dh10k-30k per month? Affordable rent is Dh72,000 pa
Only 22 per cent of 19,500 residential units launched in 2015 to date in Dubai fall in the affordable to middle-income housing criteria, JLL, a global real estate consultant said on Monday.
Though the definition of “affordable” varies across the region in terms of “price point”, the global real estate consultancy puts an “affordable” sales price in the UAE at around Dh790,000 and affordable annual rent at around Dh72,000.
In Saudi Arabia, the affordable sales price is about SAR450,000 and the affordable annual rent is about SAR47,000, while in Egypt, the affordable sale price is nearly EGP285, 000 and annual rent around EGP 32,000.
“The shortage of middle-income housing in Abu Dhabi and Dubai primarily impacts mid-income expatriates, as Emiratis are provided with housing by the government, and most low-income workers are provided with accommodation by their employers,” JLL said.
The demand for middle-income housing has been calculated from an analysis of income levels provided by Oxford Economics, it states.
Households earning between Dh10,000 and Dh30,000 per month are the main source of demand for middle-income housing, accounting for around 40 per cent of all households, which equates to 820,000 households across the UAE.
“Based on our affordability calculations, this faction of the population can afford rents of up to Dh72,000 per annum, and could potentially purchase property priced up to Dh790,000,” the report said.
Affordable housing in Dubai
The areas that offer affordable units for households within JLL’s identified income bracket are in the older areas of Dubai (Deira/Bur Dubai) or in outer areas to the South and East of new Dubai such as Dubai Investment Park & the International Media Production Zone (IMPZ).
More areas are available for rent rather than purchase with the option for purchasing an existing housing for less than Dh790,000 being Arjan, Discovery Gardens, IMPZ, Liwan and Dubai International City.
The majority of options available to middle-income households consist of apartments, with no existing villa communities within the defined price range.
Areas that offer middle-income housing which are accessible by the existing metro system are in older locations of Deira and Bur Dubai (where property can only be purchased by GCC nationals).
The proposed extension to the Red Line will, however, change this situation slightly, opening up options for families to own and rent properties around the Dubai Investment Park, Discovery Gardens and IMPZ.
The report states further enhancements to the public transport system are needed to access areas in the outer part of Dubai, between Mohammed Bin Zayed Road and Emirates Road.
Cheapest areas in Abu Dhabi
In Abu Dhabi, JLL said none of the freehold locations currently offer affordable property for sale and therefore the only option for middle-income families is to rent.
This is limited to apartment units as no villas/townhouses fall within their affordable range.
Some affordable units for rent can be found scattered across the central business district (CBD), however these are generally older buildings with little surrounding amenities and poor parking facilities.
The majority of affordable projects available for rent are located in the outskirts of Abu Dhabi, away from the CBD, in locations such as Mohammed Bin Zayed City, Mussafah, Khalifa B and Al Rahba.
The shortage of middle-income housing has resulted in high levels of sharing with JLL estimating a sharing ratio of 1.9 in some parts of the capital, indicating there are almost twice as many households as there are housing units in these locations.
Despite the recognised need to provide new units for sale to middle-income households in Abu Dhabi, none of the 4,000 units in projects launched in the first six months of 2015 offer two-bedroom units within the Dh790,000 range for middle-income households, the report reveals.
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