New Dubai homes to woo back res­i­dents

Khaleej Times - - FRONT PAGE - Is­sac John

dubai — A spate of af­ford­able hous­ing projects com­ing up in Dubai’s south­ern parts could trig­ger a ‘re­verse mi­gra­tion’ to the emi­rate, lead­ing to sharp falls in rents in Shar­jah and Aj­man, an ex­pert has said.

Ac­cord­ing to an­a­lysts, the domino ef­fect of the af­ford­able hous­ing projects — mostly lo­cated in Jumeirah Vil­lage Cir­cle, Dubai South, Al Fur­jan, IMPZ, In­ter­na­tional City, Dubai Sports City, Stu­dio City and Dubai­land — will be felt in Shar­jah and Aj­man. In ad­di­tion to nose-div­ing rents, it will re­sult in lower prop­erty prices in these emi­rates.

In 2012-2014, af­ter a sharp rise in rents across the res­i­den­tial dis­tricts in Dubai, a sig­nif­i­cant part of the mid to lower in­come seg­ment shifted to fringe lo­ca­tions or to the north­ern emi­rates. “This trend is soon go­ing to re­verse as thou­sands of af­ford­able units are made avail­able in south­ern parts of Dubai,” said A. Na­jeeb, man­ag­ing part­ner of M.S. In­ter­na­tional Real Es­tate.

Ac­cord­ing to John Stevens, man­ag­ing di­rec­tor of Asteco, there would be fur­ther de­clines in rents in Shar­jah and Aj­man in 2017 if the sup­ply of af­ford­able prop­erty con­tin­ues to sti­fle de­mand in the north­ern emi­rates.

I’m not plan­ning on mov­ing to Dubai South. As some­one who works in Bar­sha Heights, I need quick ac­cess to the of­fice dur­ing the week for late hours some­times and at the week­end, due to our HQ be­ing in Lon­don. It makes sense for me to live within a 15-minute drive to the of­fice, on Palm Jumeirah. It’s also close to the Dubai Ma­rina, my pre­ferred area to so­cialise in.

Josh Baker

I would love to move to Dubai­land just be­cause it is quiet and peace­ful; you can see that there is po­ten­tial for in­fras­truc­tural de­vel­op­ment there. On the flip­side, I wouldn’t be will­ing to move to these ar­eas as it is away from my op­ti­mum travel needs. I’m very close to the Dubai Metro now, I live in the cen­tre of the city and all my friends live nearby. Com­mut­ing to work is easy and rents are still cheaper in Shar­jah.

Nikita Menezes

With Dubai’s af­ford­able hous­ing pro­gramme get­ting a ma­jor fil­lip fol­low­ing the gov­ern­ment’s strong sup­port — and the in­creas­ing num­ber of de­vel­op­ers look­ing to pro­vide such hous­ing schemes — Dubai’s south­ern dis­tricts, where most of the low-cost devel­op­ments are com­ing up, are set to wit­ness a sharp growth in the work­ing class pop­u­la­tion.

Dubai’s low-cost hous­ing ini­tia­tives, gain­ing mo­men­tum since the re­cent ap­proval of the low-in­come hous­ing pol­icy by the gov­ern­ment, is also hav­ing a knock-on ef­fect in the North­ern Emi­rates. “A spate of new af­ford­able hous­ing projects com­ing up in Dubai’s south­ern parts is set to trig­ger a re­verse mi­gra­tion to Dubai, lead­ing to sharp falls in rents in Shar­jah and Aj­man. Over that, some land­lords are even of­fer­ing monthly pay­ments and rent-free pe­ri­ods to re­tain ten­ants,” said A Na­jeeb, man­ag­ing part­ner of M.S. In­ter­na­tional Real Es­tate.

Dubai’s new hous­ing pol­icy, which aims at pro­vid­ing res­i­den­tial units for low-in­come work­ing peo­ple while ren­o­vat­ing some old ar­eas, clas­si­fies low-in­come peo­ple into Emi­ratis and non-Emi­ratis. The pol­icy will also in­clude fam­i­lies’ in­come lev­els, place of res­i­dence and pub­lic ben­e­fits and will com­pare them with cur­rent re­quire­ments and the chal­lenges faced by the fam­i­lies.

Ac­cord­ing to an­a­lysts, the domino ef­fect of the new af­ford­able hous­ing projects — mostly lo­cated in Jumeirah Vil­lage Cir­cle, Dubai South, Al Fur­jan, IMPZ, In­ter­na­tional City, Dubai Sports City, Stu­dio City, and Dubai­land — will be felt across Shar­jah and Aj­man, from where a re­verse mi­gra­tion of the work­ing class will even­tu­ally take place. This will lead to nose­div­ing rents, lower prop­erty prices and over­all ease of traf­fic, realty an­a­lysts said.

In 2012-2014, on the back of a sharp rise in rents across the res­i­den­tial dis­tricts in Dubai, there has been a con­sis­tent ge­o­graph­i­cal shift of the mid- and lower-in­come seg­ment to the fringe lo­ca­tions or to the North­ern Emi­rates. “This trend is soon go­ing to re­verse, as thou­sands of af­ford­able units are made avail­able in the south­ern parts of Dubai,” said Na­jeeb.

The tens of thou­sands of the work­ing pop­u­la­tion who now com­mute daily from Aj­man and Shar­jah to Dubai, will even­tu­ally shift base to the south­ern parts of the Dubai — closer to their work­places — re­duc­ing the num­ber of crossemi­rates com­muters dras­ti­cally. This means lesser money will be spent on petrol and car main­te­nance, and even­tu­ally, even the health prob­lems caused by long and ex­haust­ing hours be­hind the wheel, a prop­erty mar­ket an­a­lyst said. It will re­sult in an over­all im­prove­ment in the qual­ity of life.

They said the up­com­ing ex­ten­sion of the Dubai Metro will con­nect the Nakheel Har­bour and Tower sta­tion to the Expo 2020 site, fur­ther en­abling the lower in­come seg­ment to ex­plore af­ford­able op­tions. This is likely to en­cour­age oc­cu­piers to mi­grate to devel­op­ments such as DIP and Dubai­Land, where they can find newer apart­ments which are also ac­ces­si­ble to the rest of the city.

Chang­ing faces of emi­rates

Ac­cord­ing to John Stevens, man­ag­ing di­rec­tor of Asteco, there will be fur­ther de­cline in rents in Shar­jah and Aj­man in 2017, if the sup­ply of af­ford­able prop­erty con­tin­ues to sti­fle de­mand in the North­ern Emi­rates.

“Shar­jah and Aj­man are ex­pected to ex­pe­ri­ence more down­wards pres­sure on rates, in com­par­i­son to Ras Al Khaimah and Umm Al Quwain,” said Stevens. In 2015, the Dubai Mu­nic­i­pal­ity, as part of a ma­jor ini­tia­tive, de­fined af­ford­able hous­ing for the first time as a “liv­ing space for peo­ple whose salary is be­tween Dh3,000 to Dh10,000 per month.” The civic body al­lo­cated over 100 hectares of land for af­ford­able hous­ing in Muhais­nah 4, Al Qouz 3 and 4, mostly to meet the de­mand for dwellings for peo­ple in this in­come cat­e­gory. The devel­op­ments will house more than 50,000 peo­ple.

Other steps taken for af­ford­able hous­ing in­cluded a vol­un­tary sys­tem for de­vel­op­ers to set aside at least 15 per cent of units for low­er­in­come use. When manda­tory, this pol­icy is known as in­clu­sion­ary zon­ing. A re­search pa­per from Core, the UAE as­so­ciate of Sav­ills, said few homes be­ing built by the pri­vate sec­tor in Dubai branded as “af­ford­able”, are ac­tu­ally within reach of lower-in­come fam­i­lies.

“Typ­i­cally, for homes to be con­sid­ered af­ford­able, those pay­ing for them should spend no more than 30-35 per cent on hous­ing ex­penses. How­ever, most homes be­ing branded as af­ford­able by pri­vate sec­tor de­vel­op­ers are out of reach in price terms; even the cheapest prop­er­ties tend to start at prices of around Dh500,000,” it said.

David God­chaux, chief ex­ec­u­tive of Core, pointed out that de­vel­op­ers faced a num­ber of is­sues when build­ing for lower-in­come fam­i­lies, with land pur­chase prices among the most sig­nif­i­cant.

God­chaux said lower-in­come house­holds would strug­gle to raise the nec­es­sary bor­row­ing from banks. Lower loan-to-value ra­tios in­tro­duced in 2013 to sta­bilise the mar­ket would mean that a buyer re­quires a de­posit of 25 per cent be­fore gain­ing a mort­gage. This means that they have to save Dh125,000 as a down­pay­ment to af­ford a Dh500,000 home.

An­a­lysts ar­gued that apart from the law by the Dubai Mu­nic­i­pal­ity re­quir­ing pri­vate de­vel­op­ers to in­clude up to 15-20 per cent of af­ford­able hous­ing in new projects, pub­lic-pri­vate part­ner­ship schemes where the gov­ern­ment pro­vides land for free to lower hous­ing costs, might pro­vide an im­pe­tus to the af­ford­able seg­ment of the mar­ket.

“Af­ford­able hous­ing is a fun­da­men­tal ur­ban is­sue faced by most global cities, and the quan­tity and qual­ity of this strata greatly shapes a city’s growth, scal­a­bil­ity and sus­tain­abil­ity,” they said.

Putting peo­ple first Sus­tain­able liv­ing should be af­ford­able. Dubai’s smart city goals are on the right track with its fo­cus on hous­ing for the mid­dle class. In the end, it’s about peo­ple. They come first in the de­vel­op­ment of any great city.

— KT file photo

the tens of thou­sands of the work­ing pop­u­la­tion who now live in the fringe ar­eas of Dubai or com­mut­ing daily from Shar­jah and Aj­man are pre­dicted to shift to the south­ern parts of Dubai.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.