ME Construction News: The Mid-Range Housing Approach
It’s no secret that one of the biggest challenges facing governments in the Gulf is finding enough housing for their residents. Demand for mid-range housing, specifically, in many parts of the region has now reached a critical level. Governments are taking steps to address this need – in Dubai, local authorities recently announced that they will consider enacting legislation to enable the provision of middle-income housing in certain core areas of the city – but the onus is also on developers to be ready and capable of taking on these kinds of projects.
How do we define mid-range housing? Consultant JLL defines “middle-income” housing as property provided by the market which is affordable to the middle tranche (40-60%) of households, on the assumption that they spend no more than 30% of their gross household income. The consultant says that in the UAE, an affordable sales price is about AED 790,000, with an affordable annual rate of AED 72,000 (around AED 6,000 a month).
The first issue developers should be aware of is that the demand is certainly there. Historically, there has been a tendency to focus on luxury property among some developers and in certain parts of the Gulf, as the returns tend to be higher. However, a different approach is needed. At ARADA, for instance, we believed there was significant unmet demand for well-designed master communities in Sharjah priced at an accessible price point. We launched our first project, Nasma Residences, in March 2017, and it quickly became Sharjah’s fastest-selling community.
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