Lack of Low-Cost Housing in Dubai
Escalating land rates in Dubai are making low-cost housing infeasible, as this story seems to suggest.
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Dubai's private developers have recently announced that erecting low-cost housing was not their first
priority. High land rates in the emirate have prevented them from taking up low-range housing assignments.
According to Ahmad Al Abdullah, chairman of New Dubai Properties that has constructed 22 projects worth
over $7 billion across the emirate, high land rates are forcing developers into projects that involved building
luxurious apartments, office blocks and Dubai hotels. These bring back far better returns on investment as
compared to what the affordable housing may deliver. There is already a shortage of three and four star
hotels in Dubai that many construction companies are trying to make business from. Nobody dares
announcing low-cost housing projects on the other hand though.
According to various estimates 40% of the project amount is normally required for purchasing lands while
the rest goes in undertaking construction plans. This means low-cost housing in Dubai may never be
profitable in the present-day scenario. There are only four apartment blocks apart from twelve commercial
towers and six Dubai hotels that New Dubai Properties has constructed so far. Dubai’s government has
failed in checking down its land rates until now, thus causing inflation in the real estate sector. This has also
affected the market of affordable hotels in Dubai in a negative way. There is no dearth of the expensive
hotels in Dubai on the other hand though, and many native and offshore players are lining up to build many
new five star hotels in the emirate.
Expensive real estate prices in Dubai is why many people have decided to live at Sharjah and spend up to
three hours traveling down to and up from Dubai on a daily course. While Dubai hotels and furnished
apartments may be the right place for high-flying executives, CEOs and holidaymakers to reside, there are
many who still can't afford to have accommodation in apartments or hotels in Dubai. Governmental efforts
of encouraging low-cost housing projects have always stood non-starters. The desire of having the largest,
tallest and the most advanced infrastructure has escalated Dubai’s cost tremendously. While it may indicate
a boom time for the tourism sector, there are many who would think otherwise. The need of saving money to
send back home may not allow many expatriates to buy accommodation in today’s scenario, hence they
have to move elsewhere facing large scale hurdles.
Dubai's government will have to find out a way of having a balance between lavish and affordable housing
projects. A segment of the free land should be given away at low rates to make this reality. It shouldn’t be
ignored for too long, since a large expatriate workforce keeps arriving at Dubai on a daily basis. There is a
fear; the lack of affordable housing may slow down the region’s overall growth. More and more expatriates
are finding it hard to buy accommodation in Dubai today. Some construction firms have already moved
away to other areas within the UAE with an aim at having low-cost housing developments there. This has a
potential of inflicting Dubai's economy severely unless checked by the authorities soon.
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