Dubai is always going to be synonymous with luxury retail and residential markets, but “the affordable of the market is taking some of that interest away,” says Matthew Greens, Director and Head of research at CBRE Middle East.
In the past year alone, Dubai has witnessed more focus and interest towards affordable homes than it has seen in the past five years. However, now, “developers need to develop for the local market” by leasing apartments instead of selling them, according to Greens.
Many buyers of affordable homes are investors who are raising the cost of the units when they rent them out, making them unaffordable for many, explains Erik Volkers, senior consultant at CBRE Middle East in a previous AMEinfo report. “To meet that side of the market, you need to be building leasehold products for rent rather than selling freehold apartments,” Greens adds.
Watch what he has to say about affordability versus luxury in Dubai’s residential sector.
With approximately 20,000 new units set to enter the residential market in the coming months, the emirate will also see a higher percentage of lower-priced homes as part of the affordability efforts made for the mid-income residents, according to CBRE’s Q3 2015 Dubai Market Update.
“A lot of the developments that we see in the market are really not affordable because of ticket prices and the regulations for offline sales – you need to have a 50 per cent deposit before buying,” Volkers says. However, developers are studying other efforts to introduce affordable homes in Dubai – such as taking on developments models from Europe, where there is more focus on housing corporations.