Dubai mulls over affordable housing quota for its middle-class

With Dubai’s real estate market witnessing a stellar resurgence since early 2012 and rents in preferred residential locations such as Downtown and Dubai Marina out of reach for a vast majority of the city’s burgeoning middle-class and lower income residents, Dubai Municipality is now said to be mulling over a plan to introduce a mandatory affordable housing quota for all new residential projects in the city.

According to market sources, the proposal, if implemented is likely to have a massive impact on the city’s endeavour to provide quality housing for its growing population that is finding it increasingly difficult to buy or rent ‘affordable’ homes in the city and are being forced to look at cheaper options in places like Umm Al Quwain, RAK and Ajman, where rents are said to be much lower than even the low-rent locations in Dubai.

Taking note of the issue, the Municipality had earlier this year voiced its plans to develop sustainable townships as part of its Desert Rose programme. The objective was to encourage people to live closer to their places of work, thereby also reducing the increasing traffic congestion on the city’s roads.

The main highlight of the estimated Dh30bn township developments, located near Al Ruwaya and Emirates Road will be the construction of approx 20,000 ‘affordable homes’ for UAE nationals and an additional 10,000 units for expatriates in need of affordable housing options.

The project will also offer its residents a well-developed network of buses and light rail to address connectivity issues in addition to dedicated roads for pedestrians and cyclists.

Leading realty consultants like Cluttons have welcomed the Dubai Municipality’s move to address this long-standing issue. The proposed legislation is largely expected ensure a level-playing field in the realty market and provide a huge boost to the inherent demand for affordable housing options in the city.     

As per affordable housing norms in place across several countries, developers are mandated to reserve a fixed percentage (ranging from 20-40 percent) of their residential projects for building affordable housing units targeting buyers who cannot afford to buy at market rates.

The concept which has already been initiated in countries like the UK, Singapore and India has been fairly successful in addressing the housing needs of their growing population, while enabling people from diverse backgrounds to live in a common ecosystem.

In the context of Dubai, experts point to popular suburbs and Asian hubs like Karama and Satwa that are said to be the more affordable areas for residents on the lookout for reasonably-priced accommodation.

However, they warn that inspite of the relative global success of the affordable housing model the development of such off-site suburbs on the fringes of a city’s inner sanctum areas does pose a sizeable social risk, if not properly integrated into the city’s mainstream, citing examples of lower-income boroughs in cities like London and New York. 

Yet the introduction of this new housing category is expected to offer a new safe avenue for investors looking to invest in Dubai’s realty, more so if the number of such affordable housing units being built is significantly high among the overall number of residential units being developed in the emirate.