Emaar Properties, developer of the world’s tallest building, is in talks with several UAE emirates to roll out affordable housing schemes and plans to concentrate on Dubai first, its chairman said.
Despite a housing market that is widely seen as being oversupplied, Mohamed Alabbar said Dubai still has room for properties at a price point of around AED500,000 (about $136,000).
“We’re talking to a few emirates. I’m going to focus on Dubai to start with,” he said on the sidelines of the Arabian Business Achievement Awards on Sunday night.
“We are talking about [property] of maybe AED550,000 for someone with an income level of around AED12,000 a month.
Emaar in October said it was switching its focus to affordable housing in a bid to capitalise on government housing schemes aimed at addressing the region’s chronic housing shortfall.
The Dubai-listed developer launched a division to build value housing across the Middle East and North Africa, opening up a potentially lucrative new revenue stream.
“Value housing in the UAE is needed, value housing in Saudi Arabia is needed, Kuwait [but] more in Egypt. But value housing in the UAE is a completely different concept,” said Alabbar.
The cost range for properties in the wealthy Gulf state will be higher than those in comparatively poorer Arab states such as Egypt, he said.
“Value housing in the UAE is a market… will be between AED400,000 up to AED1m. You have to create another category [for value housing here].”
Dubai was hit hard by the global economic downturn, which saw house prices fall decline over 60 percent from their 2008-peaks. In the wake of the economic crisis, many regional developers have latched on to midmarket housing in a bid to fill the gap left by the collapse of the emirate’s housing bubble.
The Middle East and North Africa has an estimated affordable housing shortfall of 3.5 million with nearly half in Egypt, Jones Lang LaSalle said in September.
High land prices coupled with the cost of infrastructure, limited home finance to low-income households and poor financial returns have all contributed to the region’s severe shortfall in midmarket housing, the consultancy said.
Iraq has the second largest shortfall of affordable housing (1 million) in the region followed by Morocco (600,000), said JLS. Saudi Arabia, the wealthiest Gulf state, has the greatest need in the Gulf compared to 40,000 homes in Bahrain, 20,000 in the UAE and 15,000 in Oman.
Several Gulf states have pledged to ramp up spending on housing in the wake of the Arab Spring revolutions, in a bid to secure quality housing for their growing populations.
Saudi Arabia has promised to spend $130bn on social projects such as building new houses and creating jobs, while King Abdullah in March pledged to spend $67bn on 500,000 new homes.
Bahrain and Egypt are also pushing to meet the shortfall following widespread unrest in the Gulf Arab state and an uprising that topped former Egyptian president Hosni Mubarak in March.
In April, Abu Dhabi awarded a AED21bn ($5.7bn) contract to state-linked firms to build housing for the local population. It has said it wants to provide “adequate and modern housing” for citizens “to help achieve social stability”