The Middle East's real estate markets are suffering from a shortage of affordable and accessible housing for the middle classes, which represent the majority of the region's societies, requiring further efforts to address the current imbalance, according to a new report by JLL.
JLL, a global real estate investment and advisory firm, said the shortage is a significant and consistent issue across all markets in the Middle East. JLL, a global real estate investment and advisory firm, said that this shortage is a significant and consistent issue across all Middle Eastern markets, particularly the key ones of Egypt, Saudi Arabia and the United Arab Emirates.
JLL's report said that this shortage is a significant and consistent issue across all markets in the Middle East, particularly the key ones of Egypt, Saudi Arabia and the UAE. While there is a general recognition of the issue and increasing numbers of policy initiatives and projects targeting the middle-income segment, much more needs to be done to address the current shortage that is plaguing the real estate sector in these countries, the report said.
While there is a general recognition of the issue and increasing numbers of policy initiatives and projects targeting the middle-income segment, much more needs to be done to address the current shortage. The report defines middle-income housing as market-provided housing that is affordable to the middle segment of households and that does not consume more than 30 percent of total household income in housing.
The report identifies two components of middle-income housing. The report identifies two key components of the market - properties for sale and those for rent, as many middle-income households are unable to purchase real estate either due to regulatory restrictions or lack of available capital and financing.
According to JLL, the affordable sale price in the UAE is currently around Dh790,000, while the affordable annual rent is around Dh72,000 per year. In Saudi Arabia, these prices drop to about 450,000 riyals for sale and 47,000 riyals for annual rent.
<“The importance of the middle-income real estate sector in the markets should not be underestimated, as it represents more than 60 percent of all households in both Saudi Arabia and Egypt, which equates to about 3.3 million households in Saudi Arabia and 12 million households in Egypt,” JLL said. <“The relative numbers in the UAE are smaller, but there are still more than 820,000 households, representing almost 40 percent of all households in the UAE.” <In 2011, JLL identified the need to build an additional 3.5 million homes that are affordable to middle-income earners across the region. The report said an increase in this gap over the past five years was almost certain. According to the report, only 22 percent of the units started in 2015 are affordable to middle-income earners.
According to the report, only 22 percent of the units started in 2015 are affordable to middle-income earners. <The report notes that solving the shortage of middle-income housing will require focused efforts from governments, private real estate developers and other stakeholders. This is in addition to providing developers with access to affordable land, reducing the cost of infrastructure and providing land costs and services that are borne by affordable housing projects.
