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ME Construction News: The Mid-Range Housing Approach

News: February 4, 2018

ME Construction News, February 4, 2018
It’s no secret that one of the biggest challenges facing governments in the Gulf is finding enough housing for their residents. Demand for mid-range housing, specifically, in many parts of the region has now reached a critical level. Governments are taking steps to address this need – in Dubai, local authorities recently announced that they will consider enacting legislation to enable the provision of middle-income housing in certain core areas of the city – but the onus is also on developers to be ready and capable of taking on these kinds of projects.

How do we define mid-range housing? Consultant JLL defines “middle-income” housing as property provided by the market which is affordable to the middle tranche (40-60%) of households, on the assumption that they spend no more than 30% of their gross household income. The consultant says that in the UAE, an affordable sales price is about AED 790,000, with an affordable annual rate of AED 72,000 (around AED 6,000 a month).

The first issue developers should be aware of is that the demand is certainly there. Historically, there has been a tendency to focus on luxury property among some developers and in certain parts of the Gulf, as the returns tend to be higher. However, a different approach is needed. At Arada, for instance, we believed there was significant unmet demand for well-designed master communities in Sharjah priced at an accessible price point. We launched our first project, Nasma Residences, in March 2017, and it quickly became Sharjah’s fastest-selling community.

We followed that up with Aljada, the emirate’s largest mixed-use mega project, in September 2017. Again, we’ve ensured that a significant proportion of the homes we have on offer in Aljada are priced at what JLL would term a middle-income level, and this has ensured an outstanding response from the market. Our experience with both projects therefore tells us there is strong demand for this type of housing.

Read the full article here.