Samir Salya on the expected growth of the UAE’s affordable property sector

Demand for property in the UAE has taken a noticeable shift towards more affordable mid-market communities. This regional movement marks a noticeable growth in the development and investment of affordable real estate in 2017. The continuation of this movement is likely to boost the UAE market into 2018.

The rise of mid-market properties

As the UAE property market is showing signs of potential oversupply, the rental market is becoming weaker and the sales market is experiencing a decline. This has led to an increased focus on affordable property which is more likely provide a return.

This redistribution of demands is illustrated by price hikes in certain communities. A report by UAE marketplace dubizzle.com and property consultancy JLL stated that the average price per square foot rose by 19.1 per cent year-on-year in Discovery Gardens, 8 per cent in Remraam and 4.96 per cent in Dubai Sports City. This resulted in declining rents noted in the region.

Mid-market properties were the only price category of the Dubai residential market to see a growth in online searches. This indicates a continued demand for affordable housing.

The proportion of searches, specifically for property under Dh1,000 per square foot, increased to 66 per cent of all property searched on the dubizzle.com platform. This has increased from 42 per cent in September 2016. The change is reflected in the increase in advertising, with 57 per cent of all property advertisements accounted for by mid-market properties.

Regional Boosts

Three UAE emirates are expected to become more affordable cities on 2018, according to Numbeo’s latest report. Its 2017 mid-year cost of living index ranked Dubai as the 206^th most affordable city out of 511. Abu Dhabi and Sharjah took 278^th and 302^nd position, respectively.

Samer Abdin, General Manager of dubizzle.com told The National: “Developers in Dubai announced 16 new projects this year – several of them were in the mid-market segment offering attractive payment plans. Agencies who are focused on off-plan sales and have inventory that falls under the less than AED1,000 per sq ft bracket are likely to see gains here.”

The future of affordable housing

Dubai’s developers are creating long-term initiatives to capitalize on this market, including plans to build in neighbourhoods that often receive a high demand for affordable properties.

Aldar Properties noticeably launched its first mid-market project for Abu Dhabi in April. The Bridges is worth AED1.3 billion. Mohamed Khalifa Al Mubarak, Chief Executive Officer of Aldar Properties, stated the development was designed to meet “the significant demand for high-quality – yet affordable – homes in prime investment zone destinations across Abu Dhabi”.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.