1. REAL ESTATE
24 / Dec 2015-Jan 2016 / PROBIZ
With property prices stabilising,
Dubai’s real estate market has
become very attractive for both end
users and first-time buyers
By Hina Navin
A
ccording to a study by real
estate research firm Colliers
International, a majority of the
households in Dubai earn between
AED9,000 to AED15,000 per month.
However, there is a huge shortage
of properties in the market that cater to this large
portion of working class individuals in the emirate.
With Dubai facing a lack of affordable home
alternatives, both new and existing developers are
moving towards building value housing projects in
the country.
Pawan Batavia, Managing Director of Synergy
Properties, stated that the shift is happening
because affordable housing is higher in demand
and hence sells faster than luxury properties.
“This segment will continue to grow with a rapid
increase in demand over the next few years;
primarily because there are a huge number of
skilled expats that are coming to the UAE. Plus,
most first-time buyers are attracted to this sector
before moving up the ladder to buy a luxury
apartment,” he added.
VALUE HOUSING IN DEMAND
In the UAE, affordable housing is a term used for
properties where the total price per unit is less
than the average price of similar units, Batavia
explains. Developers selling affordable housing
units are often based on locations that are away
from the city centre, smaller in size than regular
apartments or a combination of both.
“This doesn’t mean that the developer is selling
at a cheaper price/sq ft in most cases. However,
since the total price of a unit is cheaper, it allows
THE MID-
MARKET
SEGMENT
GAINS
GROUND
Affordable
housing helps
an individual
to comfortably
pay to purchase
a home and
developers to
sell the property
faster.
Suraj Rajshekar
GM, Rocky Real Estate
more brackets of people to buy that specific
property. Then there are payment plans such as
instalments of 1-2 per cent per month or instal-
ments that are carried forward post completion of
the project, which makes it attractive for buyers
who can pay slowly over time,” said Batavia.
Suraj Rajshekar, General Manager of Rocky
Real Estate, said that from 2003 to 2009 property
developers were purely catering to the luxury
market, high net worth individuals or the upper
middle class. But in the last few years, both the
authorities and developers began to realise that
they had been missing out on serving a large
working class population—with household
income between AED6,500 and AED20,000—who
were unable to afford the existing homes avail-
able in the market, priced at one and half million
or higher. “Affordable housing helps an individual
to comfortably pay to purchase a home and de-
velopers to sell the property faster,” emphasised
Rajshekar. To illustrate with example, an individu-
Pics:Shutterstock
REAL ESTATE
PROBIZ / Dec 2015-Jan 2016 / 25
The Dubai Property Show was held
in Mumbai, from November 6-8,
with 35 property developers from
Dubai showcasing some of the
city’s most iconic real estate devel-
opments to Indian investors.
At the launch, Ahmad Bin Harib
Al Falahi, UAE Commercial and
Trade attaché to India, said, “I take
great pride to see my city being
exhibited all over Mumbai. We
have a lot to offer, including small,
large and luxury property develop-
ers for the Indian market.”
Nakheel showcased projects
worth over USD4.6 billion in con-
struction costs, such as the 15.3
sq. km Deira Islands, projects on
the Palm Jumeirah, and residential
flats at Warsan Village.
Indian investors already account
for more than 11 per cent of
Nakheel customers, buying almost
4,400 villas, apartments and land
plots with a combined value of
about USD2.5 billion.
Ali Rashid Lootah, Chairman,
Nakheel, said, “Indians are the
top foreign property investors in
Dubai, and key to Nakheel’s cus-
tomer portfolio as one in 10 of our
investors come from India.”
Alharith Bin Salem Almoo-
sa, Vice Chairman and Deputy
General Manager, Falconcity of
Wonders (FCW) LLC, developer
of FCW in Dubai, said, “Indian
investors were concerned about
a number of matters entailing
property registration and customer
service. We informed them about
the easy process of purchasing
and registering a property.”
Barry Ebrahimy of Al Hamra
Real Estate Development was
quoted in a Gulf News report
said, “Indians form a significant
portion of property investors in
the UAE. Our properties in Ras Al
Khaimah start from INR6.5 million
for a 450 sq.ft apartment on a
private island.”
Other developers at the show
included Emaar, Damac and
Kleindienst Group, which was
promoting its Floating Seahorses
project that consists of floating
villas with an underwater level.
al earning AED20,000 will receive a house rent al-
lowance (HRA) of 30 per cent, i.e, AED6,000 from
his/her company. When they use the AED6,000
as a monthly installment for a property pur-
chase instead of spending it on rent, the amount
automatically becomes an investment. Moreover,
people often intend to save 15-20 per cent of their
earnings—AED4,000 in the above case. Hence the
total savings for someone earning AED20,000 will
be nearly AED10,000; almost 50 per cent of their
salary, which is significantly high.
Rajshekar continued, “These developments
are normally built on the outskirts of the city in
areas such as Mohammed Bin Rashid City, Dubai
Silicon Oasis, Downtown Jebel Ali, Dubai World
Central, where many of the prominent industries,
warehouses and free zones are also located. This
way the home and workplace are within close
proximity, thereby reducing daily travel time to
a minimum. Making people’s lives easier goes
a long way in the overall growth of any city.”
Affordable units in Dubai are focused on quality
rather than luxury. The layouts provide ample
space with play areas for children, swimming
pools and community centres. The building com-
plexes are usually located near public transport to
ensure easy accessibility.
FILLING THE NEED
There are already many developers who have
invested in building affordable properties in
Dubai, owing to the strong domestic demand. Dan-
ube Properties has launched affordable housing
options starting at AED475,000 for a studio. Their
latest Glitz 3 project offers a relaxed payment
plan, allowing buyers to pay only 1 per cent every
month (after an initial down payment).
Atif Rahman, Head of Property Development at
Danube, said the demand for affordable housing
in an emerging and sustainable economy support-
ed by a rising population will remain constant.
“With the lifestyle, security and social equilibrium
that Dubai provides, expat families would cer-
tainly want to own a house here some day. They
account for the largest volume of potential buyers
of such homes. The growth in the city’s popula-
tion feeds the rental market, thereby keeping
the buy-to-let investor keen on purchasing
new assets.”
The consumers for affordable housing are
end-users aspiring to own a property in the city
and long-term investors who want to bank on
rental yield. “Developers have realised the poten-
tial of the affordable housing segment; especially
during economically unstable times. However,
our plans to offer affordable housing don’t stem
from the need to adjust to market conditions,
but to make good quality homes available to the
masses,” concluded Rahman. n
Dubai Property Show held in
Mumbai for the first time
Dubai-based developers showcased their most iconic
properties at the first property show of its kind in Mumbai