While Dubai has faltered in creating affordable housing, new efforts could bring more middle-income families back to the city.

1. More Affordable Housing Could
Bring People Back to Dubai
Dr. Ehsan Bayat

2. More Affordable Housing Could Bring People
Back to Dubai
• When most people think about Dubai real estate, they likely picture luxury
developments, like glittering skyscrapers or floating homes. Despite Dubai’s reputation
as a playground for the global rich, the push for affordable housing in the city has grown
considerably in recent years.
• In recent years, many middle- and lower-class families have begun moving to the suburbs
because they can no longer afford the luxury apartments and villas of Dubai. This egress
from the city has occurred due to a stark lack of affordable housing, both for buyers and
renters. These families now make their homes in less expensive cities like Sharjah and
Ajman, located to the northeast of Dubai.
• As the price of oil has declined, Dubai and other locations throughout the Middle East
have struggled to diversify their economies. Dubai has performed particularly well
because it is an international and regional business hub, but this identity depends on
being able to attract—and keep—a talented workforce in the city long-term. Doing so
may be increasingly difficult when so many people are priced out of the housing market.

3. Initial Pushes to Make Housing More
Affordable
• Last year, a number of units that came onto the Dubai market were branded as
affordable housing. However, the real estate consultancy Savills published a research
paper explaining what the phrase “affordable housing” really means in Dubai and found
that efforts from the government to increase this type of housing have not yet produced
results. Dubai’s government mandated that developments contain 15 to 20 affordable
housing to balance out the high price of luxury. According to the report, the homes built
as part of this mandate still cost a great deal of money and certainly more than a
middle-class family could afford.
• Around the same time that the government made this mandate, public-private
partnerships were made to offset the high prices of land acquisition. Savills pointed out
that this measure would not stretch very far, considering that lower-income families
have very few options for financing a home. Banks that will approve mortgages for
families in these income brackets generally have extremely strict criteria for eligibility.
Developers have begun to provide off-plan agreements to counter this, but such a deal
comes with risk, and delayed project delivery could prove disastrous. As a result, most
lower-income families continue to rent.

4. A New Attempt at Leveling the Playing Field
• Luckily, it seems that Dubai’s government has paid attention to the criticisms of its initial efforts to
create more affordable housing. Recently, the emirate laid out new legislation that Cluttons called
a “watershed moment.” According to the real estate consultancy, the new laws may help the city
avoid some of the downfalls of other major metropolises, especially in terms of creating low-
income neighborhoods that are segregated from the rest of the city. The new legislation aims
particularly to provide affordable homes in core Dubai neighborhoods.
• While the exact details of this new legislation are not finalized, it looks like the regulations will
address quotas on built-to-rent and built-to-sell units, so that both are available in any
neighborhood of the city. The Dubai development pipeline is extensive, so this measure should help
keep neighborhoods diverse. According to Cluttons’ estimate, nearly 80,000 units will be completed
in the coming three years and more than 440,000 people will move to the city.
• Municipality, land division, and transport officials have all been involved in the process of creating
new laws to increase opportunities for low- and middle-income families in the city. The Dubai
government understands that the housing issue is linked to a number of other considerations, from
business development to traffic. According to the government, the new laws are less about
curtailing luxury and more about building a sustainable city. The new legislation will make it easier
to live and shop near work, which reduces congestion.

5. People Returning to Prime Neighborhoods
in Dubai
• An increasing number of developers are cooperating with the Dubai government to create
affordable housing. A number of new projects are set to open their doors in the southern parts of
Dubai, which could trigger a sort of reverse migration back into the city. This possibility has become
stronger with landlords offering incentives to fill their apartments, such as rent-free periods and
creative installment plans. The areas with these deals include Dubai Sports City, Jumeirah Village
Circle, Studio City, and Dubailand, among others. As the government focuses on renovating older
areas of the city, these neighborhoods could see similar deals appearing.
• Of course, bringing people back into the city could create issues for the fringe areas of Dubai, as
well as the northern emirates. Analysts predict that rents in Sharjah and Ajman will plummet as
families relocate back to Dubai once affordable options become available. At the same time,
bringing people back into the city will go a long way in helping Dubai achieve its goals of improving
traffic by cutting down significantly on daily commutes. Currently, tens of thousands of workers
commute from Ajman and Sharjah to work in Dubai. Traffic will also be alleviated when the
upcoming Dubai Metro extensions are completed. These extensions will connect the Nakheel
Harbour and Tower station to the Expo 2020 site.