Rising population growth together with a lack of urban areas may lead to a shortfall of more than a million housing units in the GCC by the end of 2018, a new report from the management consultants Strategy& has warned.
The total population of the GCC has increased by more than 67 per cent from 2000 to last year. It stood at more than 49 million in 2013, compared with 29.4 million in 2000, and it continues to grow 2 to 3 per cent each year, according to figures provided by Strategy&.
“The relatively young demographic structure of the region is creating a surge in demand that could lead to a shortage in excess of one million units by 2018,” said the Strategy& partner Samer Bohsali
Such a shortfall is exacerbated by inflexible home financing provisions throughout the region, leaving many would-be buyers without access to mortgages, in turn leading to low home ownership.
A year ago the Central Bank of the UAE eased mortgage lending rules, enabling UAE nationals to borrow up to 80 per cent of a property’s value for a first investment of Dh5 million or less, falling to 70 per cent for properties worth more than Dh5m.
A report from the property consultants JLL this week noted that consumers in Saudi Arabia were taking advantage of mortgages to buy homes in cities such as Jeddah. Demand for housing loans from Saudi nationals has been rising rapidly since the kingdom approved its first mortgage law in 2012.
Strategy&, formerly known as Booz & Company, noted, however, that only about 48 per cent of UAE households own their own homes, compared with 94 per cent in Singapore and 65 per cent in the US.
The problem is more acute elsewhere in the region, with just 35 per cent of households in Saudi Arabia and 23 per cent in Qatar owning their homes.
High unemployment across the region means that an increasingly larger portion of the regional population is unable to purchase or even rent homes.
Strategy& noted that while GCC governments had launched mega-housing projects aimed at low-income residents, such units are often designed and constructed without sustainability and community factors, and therefore often do not retain their value over the long term.
A better and more unified approach to the provision of housing is required by governments, according to Ramy Sfeir, another Strategy& partner.
“Rather than focusing simply on bricks and mortar, GCC housing policies should aim to build vibrant communities, create jobs, enhance social welfare and ensure a healthy environment,” he said.
Public-private partnerships can be used by governments to enable faster and more sustainable development of housing projects, combine the investment funds and expertise needed to execute and manage housing projects, according to Strategy& ’s findings.
Governments would also be wise to develop financing schemes that more effectively target low-income households, while revamping mortgage laws to offer greater protection for low-income households, the consultants said.
jeverington@thenational.ae
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