There has been a growing demand for affordable homes in Dubai as more people settle down for longer in the city and opt to own a home amid rising rents.
Projects are under development in areas including Arjan, Dubailand, Al Furjan, Majan, Dubai Sports City, Dubai Production City, Dubai Silicon Oasis, Damac Hills, Damac Hills 2 and Jumeirah Village Triangle.
Damac Properties, Samana Developers, Binghatti, Danube, ZaZen, Sol Properties and Iman Developers are among the companies building projects catering to middle-income earners with a monthly salary of between Dh10,000 and Dh25,000 ($2,720 to $6,800).
“Many end-user occupiers are now seeking more affordable accommodation as the cost of living rises, driven by increasing rents and rental yields,” Prathyusha Gurrapu, head of research and consulting at Cushman and Wakefield Core, said.
Buyers with a monthly household income of between Dh20,000 and Dh25,000 could afford homes in the Dh1.2 million bracket, with 30 per cent of their income dedicated to mortgage payments, she said.
“The availability of flexible payment plans in off-plan projects is encouraging more investors and end users to make purchases,” she added.
Damac Properties says it has affordable projects priced below Dh1 million, as well as in the Dh1 million to Dh1.5 million range, which it calls “affordable luxury”, in Dubai at Damac Hills, Damac Lagoons and Business Bay.
Prices depend on location and amenities. In the affordable segment, Damac has one-bedroom apartment units ready starting from Dh440,000 in certain projects. In the affordable luxury segment, the developer offers studio units that are ready starting at Dh1.073 million and for off-plan units, prices vary between Dh1.06 million and Dh1.32 million.
Payment plans for new launches include a 20 per cent downpayment, 4 per cent Dubai Land Department fees and 1 per cent monthly payment. For completed projects, buyers need to make a 100 per cent payment along with DLD fees.
The company currently has about 40,000 units in various stages of development and planning across the affordable, luxury and affordable luxury segments.
New projects in areas including Business Bay and Damac Lagoons cater “for a range of investment types, from affordable to high-end ultra-luxury”, Mohammed Tahaineh, Damac's general manager, told The National.
Dubai-based Samana Developers, which is building 29 projects, currently prices a studio flat in the off-plan segment from Dh694,000. A one-bedroom flat costs Dh1,049,000 at its project in Dubailand, with a downpayment of 15 per cent for domestic customers and 20 per cent for international buyers.
The company expects to deliver most units within the next four years at Dubailand, Production City and Studio City.
“The demand is extremely good,” Imran Farooq, chief executive of Samana, said. “Whatever we launch, 80 per cent of it sells out in 72 hours.”
UAE nationals and Dubai residents are the main buyers. Demand is also coming from Europe and Arab countries, with customers buying homes for investment, for living in and to have a second home in Dubai.
Residential transactions surge
Dubai’s property market rebounded strongly from the coronavirus pandemic-induced slowdown on the back of government initiatives such as residency permits for retired and remote workers and the expansion of the 10-year golden visa programme.
Overall growth in the UAE’s economy due to diversification efforts is also supporting the property market.
Rents and property prices increased in the emirate during the second quarter of this year, according to the latest report from property management company Asteco.
Apartment and villa rental rates increased by 8 per cent and 4 per cent, respectively, during the period while apartment sales prices rose by 5 per cent and villa prices by 8 per cent, Asteco said.
The Dubai Land Department registered 32,109 transactions in the second quarter of this year, up 32 per cent compared to the same period last year. The total sales value surged 23 per cent year-on-year to Dh63 billion.
Properties priced between Dh1 million and Dh2 million made up 33 per cent of total transactions, up from 27 per cent during the same quarter last year, DLD data compiled by Square Yards found. Properties priced below Dh1 million comprised 34 per cent of the total deals, down from 38 per cent in the second quarter of 2023.
Dubai developer Danube recently launched the Oasiz in Dubai Silicon Oasis, targeting buyers earning from Dh15,000 to Dh20,000 per month. A studio starts at Dh699,000 with a 20 per cent downpayment and a 1 per cent payment plan which amounts to Dh6,990 per month.
“Instead of paying (about) Dh6,000 in rent each month, potential buyers can now put that money towards owning their own apartment,” Rizwan Sajan, chairman and founder of Danube Group, said.
“This initiative is geared towards first-time homebuyers, young professionals, and mid-level investors who are looking to make their first real estate investment in Dubai.”
Dubai developer Binghatti is developing the Binghatti Ghost project in Al Jaddaf. It offers studios, one, two and three-bedroom apartments with prices starting from Dh867,750 for a studio.
Sol Properties, another UAE based developer, is also launching affordable homes amid higher demand from buyers. The price of a studio starts from Dh680,000, while a one-bedroom apartment costs Dh955,000.
The company is building 3000 units at Jumeirah Village Triangle and targeting individuals who earn between Dh10,000 and Dh12,000 per month.
“Many expats, particularly those with modest incomes, are increasingly seeking affordable housing options,” Ajay Bhatia, founder and chief executive of Sol Properties, said.
“Initiatives like the 10-year golden visa and the residence visa for the retired have further encouraged long-term settlement in Dubai, boosting demand for affordable and mid-tier housing.”
Dubai-based ZaZen Properties is developing projects in Al Furjan and Jumeirah Village Triangle with prices ranging from an average of Dh950,000 for a one-bedroom apartment to Dh2.5 million for a three-bedroom unit with a maid’s room.
“We’ve observed a noticeable increase in demand for high-quality, sustainable homes, particularly due to the influx of new residents moving to the UAE and Dubai over the past year,” Madhav Dhar, chief operating officer and founding member of ZaZen, said.
“Today’s buyers are more discerning and are seeking more spacious homes as they plan for mid-to-long-term stays, unlike the more transient behaviour we have witnessed in previous years.”
Both the affordable and luxury property markets in Dubai are growing, but at different rates, according to Danube's Mr Sajan. “While there is steady demand in the affordable segment, the luxury market has seen a more rapid expansion in recent years,” he said.
“This trend can be attributed to Dubai's international reputation as a luxury destination combined with the promise of a very high standard of living, which is drawing high-net worth individuals and international investors to invest in the city.”
Dubai's luxury home market hit record levels in 2023 as sales of $10 million-plus homes nearly doubled to $7.6 billion, performing better than London and New York, Knight Frank said in January.
The emirate's super-prime market – properties valued at more than $25 million – also surged last year, with 56 deals worth $2.3 billion – double the previous year's total.
Global high-net-worth individuals (HNWIs) are expected to spend $4.4 billion buying Dubai property this year, up 76 per cent compared to last year, as demand for luxury homes from the world’s super-rich continues to remain strong in the emirate, Knight Frank said.
Dubai's market is still skewed towards the high end, with new luxury developments becoming more prominent in the last 12 to 18 months “due to margin attraction, and the demographic profile of expat arrivals or investors”, Steve Bramley-Jackson, global head of real estate research at HSBC Bank Middle East, said.
Meanwhile, affordable property costing up to Dh1 million “will appeal quite simply to middle-income earners who intend to reside in Dubai, rather than purely invest”, he added.
Dubai 2040 master plan boost
The Dubai 2040 Urban Master Plan unveiled by Vice President and Ruler of Dubai Sheikh Mohammed bin Rashid, highlights developing affordable housing units to cater to middle-income residents. The plan, unveiled in 2021, aims to ensure that Dubai is the best city in the world in the next two decades.
As part of the plan, five main urban areas will be developed and spaces designated for educational and health facilities will increase by 25 per cent. It also seeks to increase population densities around mass transit stations.
District 2020, the site of Expo 2020, is expected to become an economic and growth hot spot. Featuring affordable housing, it will also be a focal point for the exhibitions, tourism and logistics sectors.
Dubai is estimated to register a handover of 38,174 new homes this year as the property market booms, according to a new report from consultancy ValuStrat.
Total estimated completions as of the first half of this year stood at 6,939 apartments and 2,145 villas, equivalent to 20 per cent of preliminary estimates for the whole of 2024, the consultancy said in July.
About 91,718 apartments and 28,385 villas are under construction in Dubai with promised handovers by 2028, ValuStrat estimated. Of these projects, 10 per cent are in Jumeirah Village Circle, with another 10 per cent in Business Bay, followed by Jumeirah Lakes Towers with 5 per cent, the data showed.
The influx of expatriates seeking budget-friendly housing options has “significantly increased demand in the affordable housing segment”, Luke Remington, managing director of haus&haus real estate, said. Investors are also “recognising the potential for steady returns from affordable housing, especially in popular areas like JVC and Arjan, where demand for rentals is high”.
However, he added that developers are facing substantial increases in construction costs and must focus on boosting quality “to meet the expectations of today’s buyers and remain competitive”.
