In a move ahead of the region’s largest real estate event, speakers at the Cityscape Global conference, which began in Dubai yesterday, emphasized the urgent need to provide housing units for low- and middle-income earners in the Dubai real estate market, The conference revealed a shortage of housing units suitable for low-income groups, which include more than 820,000 families—representing approximately 40% of all families in the United Arab Emirates. Speakers noted that only 22% of the residential units launched in the emirate during 2015 were suitable for this segment.
Social Impact
During the conference sessions, Craig Bloom, Head of Research at JLL for the Middle East and North Africa region, about the social and economic impact of the significant shortage in the supply of housing for the middle-income segment in the Middle East and North Africa region, calling for greater efforts to correct the current imbalance between supply and demand in this housing segment.
Causes of the Acute Shortage of Housing Units
Regarding the causes of the acute shortage of housing units, Blomb listed five main factors that contributed to this shortage and the rise in prices, which are unaffordable for middle-income groups, Rising land prices and the high capital costs of building necessary infrastructure—such as roads, electricity, and sewage systems—are at the top of the list, as is the adoption of construction techniques using prefabricated components, which has contributed to higher construction costs, and the lower financial returns on middle-income housing compared to those for other income segments, making it less attractive to real estate development companies, in addition to the limited ability to obtain adequate financing for low-income families due to the general immaturity of mortgage markets.
Preference for Residential Real Estate Investment
Furthermore, a study conducted by "YouGov," a company specializing in global market research, confirmed that more than half of investors prefer residential real estate as their first choice for spending $10 million in the UAE real estate market, noting that 60% of investors view the UAE as one of the most promising regions for the real estate sector.
JLL defines middle-income housing as housing provided by the market that is characterized by prices affordable to middle-income families (40% – 60%), based on the assumption that these families spend no more than 30% of their total household income on housing.
