Dubai-based real estate developers are seen pushing the idea of going affordable
The business mantra for renowned UAE-based real estate developers has mostly revolved around delivering high-end residential units to buyers seeking ultimate luxuries. But a new trend is sweeping across the Emirates’ real estate market that promotes affordable living units. Currently,
Dubai is taking the lead in this regard. Dubai-based real estate developers are seen pushing the idea of “going affordable” and the results of this move show in new residential development initiated across the emirate.
Owing to slight fluctuations in the job market, Dubai residents are figuring out ways to cut down on their rental outgo. Expat workers in Dubai are taking various measures to keep remittances stable and cutting rental costs has become an obvious way to deal with the issue. However, several new launches by prominent developers not only promise lower rents, but may actually allow a chance to tenants to become homeowners.
Flight to affordability
The signs being witnessed in Dubai’s real estate market show that a large number of residents are either moving to more affordable areas of the emirate or are entirely moving to a new emirate in pursuit of affordable housing units. Most residents who are unable to take the big decision of migrating to another emirate are leaving their large high-end units for more affordable residences. This trend has led towards a rise in vacancy rates for super luxury units, thus leading to a marked increase in rents for mid-market affordable units available in desirable buildings.
Though Dubai’s real estate industry is adopting the affordability route, it has also given rise to a problem; the high demand for mid-market housing units is not being balanced out by a proper supply mechanism. Acting quickly to fulfil the demand for affordable housing, Dubai has managed to add 2,000 new mid-market apartments that include Siraj Tower at Arjan (Dubailand) and 400 affordable units in Dubai Silicon Oasis. Other affordable developments include the mid-range Ajmal Sarah Tower and Dubai Sports City, along with Canal Residence West.
Furthermore, Bloom Properties announced a mid-market residential project, called Bloom Heights, in Dubai’s Jumeirah Village Circle. The mid-market project will include two high-rise towers slated for completion in early 2019. The buildings will consist of 686 affordable residential units.
Silver lining for owners
Owing to the increase in demand for mid-market housing units, this particular category is gaining value. Most mid-level units in Dubai have not undergone softening of prices in the past 12 months. In some sought-after locations in Dubai such as Discovery Gardens, Jumeirah Village, Bur Dubai and Al Ghusais, landlords are demanding slight rental increases during renewal of contracts. Even then, these properties have not entirely left the affordability bracket to the relief of middle-income residents.
Demand for affordable housing units in Dubai will most likely remain strong. The good news is that the current shift of Dubai’s real estate sector towards affordability is not only proving beneficial for landlords but is also a harbinger of good news for tenants.
Residents have been offered a chance to upgrade their status to property owners if they have enough finances to buy an affordable residential unit. This is one reason why quality communities like Jumeirah Village have seen a rise in interest from end-users and investors alike. Those people who are thinking of renting out their properties should consider the following statistics. According to UAE property portal Bayut.com, rental yields for select apartment categories can rise as high as eight to 10 per cent, which translates to instant profit.
Dubai-based developers who are planning to launch mid-priced residential buildings, or who have already started work on such buildings, should respond to an increasing demand for affordable units. By offering the right incentives, these developers can inspire tenants to become buyers. This is possible since interest rates for properties are still on the lower side.
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