Lack of Low-Cost Housing in Dubai

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                       Lack of Low-Cost Housing in Dubai

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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