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Lack of Low-Cost Housing in Dubai

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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

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.