Report reveals shortage of affordable homes in UAE 

Only one in five homes built in Dubai this year can be considered affordable housing, according to real estate consultants JLL.
The firm released the figure as part of a report on the middle-income housing sector in the Middle East and North Africa region (MENA).
The report says there is a marked shortfall in supply, which is having both a social and economic impact. JLL said it defines ‘middle-income’ housing as that which is affordable to the middle tranche (i.e. 40-60 per cent) of households on the assumption they spend no more than 30 per cent of their gross household income on housing.
It said that the definition of affordable varies across the region in terms of ‘price point’. The report indicates that an ‘affordable’ sales price in the UAE is about Dhs790,000 with an affordable annual rent of about Dhs72,000.
It estimates that there are more than 820,000 middle-income households in the UAE, representing almost 40 per cent.
JLL blamed the problem on factors such as high land values, high capital costs for associated infrastructure, such as roads, electricity and sewerage, and low adoption of prefabricated construction techniques making costs higher.
Other factors include lower financial returns compared to other residential sectors, making such developments less attractive for developers, and limited access to suitable finance for low income families, due to generally immature mortgage markets.
The report suggests governments, private developers and other stakeholders must focus on six key solutions:
1. Providing developers with access to affordable land.
2. Reducing the cost of infrastructure and land servicing costs borne by affordable housing projects.
3. Promotion of industrial approaches to construction and more unified, large scale procurement processes to reduce construction costs.
4. Adapting developers’ business models to make affordable homes more attractive.
5. Improve access to mortgage financing.
6. Regulate the delivery of affordable homes and ensure ongoing affordability.
It cited regulator RERA in Dubai as showing that rental caps can protect middle-income households from spiralling rent increases.
Craig Plumb, head of research at JLL MENA, said: “While none of these solutions are easy, we believe that working together, governments and developers can address the shortfall.”