The UAE has no shortage of jaw-droppingly impressive homes, replete with private beaches and architectural flourishes of a kind normally found in the pages of design magazines. But for our economy to function properly with its heavy percentage of expatriate workers, we need to have a range of accommodation suitable for those on every rung of the economic ladder. If workers cannot find homes to suit their budgets, they won’t bring their skills here.
This issue is sufficiently important that there is regularly discussion about whether the government should require developers to build a range of homes, from plush penthouses through to more modest accommodation for those in lower income brackets. There has already been intervention to significantly improve the quality of accommodation offered in labour camps, but there has not been the same kind of official intercession for middle-income housing.
One reason for the official reticence to meddle is it is nearly always better if the market can provide the solution on its own through the process of supply and demand. As we reported yesterday, it seems that this dynamic is beginning to manifest itself, with one company launching a 450-unit development in Al Furjan in Discovery Gardens, behind Ibn Battuta Mall in Dubai. Prices to buy fully furnished apartments in the Ritz development range from Dh430,000 for a studio to Dh750,000 for one bedroom and Dh990,000 for two bedrooms. These prices are more realistic for people earning around the median income of Dh20,000 per month.
With low oil prices manifesting themselves in a softening of Dubai's top-end housing market – where there are reports of 6,000 homes that are standing empty – developers are finding a more buoyant market in more modest accommodation. These appeal to investors as well as those on modest incomes and to those opting to try to save more as the economy adjusts to lower oil revenues.
Most analysts predict that Dubai’s housing market will bounce back strongly from this temporary softening of demand and the predictions are still for Dubai’s population to increase by one million by 2020, requiring 18,000 new homes per year.
While the economy of Dubai and the UAE as a whole has shown its resilience, there will still be demand for homes for those with modest budgets when the market improves. Smart businesspeople know that profit can be found by providing what people want and there will always be demand for affordable housing.
