Affordable housing woes in UAE, report reveals
- An exclusive report by UAE’s leading property search portal shows, more than half of UAE online viewings are for properties renting for less than 100,000 dirhams per annum.
- Yet the affordable housing segment, particularly low-priced villas, continues to be in short supply; Prices have rocketed, resisting broader market trends.
- Dubai’s Discovery Gardens provides the best yield in UAE pegging at more than 10 percent, despite a big drop in rental values this year.
- Propertyfinder research shows major differences between publicized prices and the prospective buyer wants.
Propertyfinder Group’s inaugural UAE Real Estate Trends report shows a continued undersupply of affordable villas in Dubai thus pushing up prices in this segment, causing it to outperform a broadly lackluster market that remains overstretched by low oil prices and a sluggish economy in the Gulf.
These gains may be positive for investors but will be far from welcome by residents struggling to find affordable options of stay in Dubai, which is among the 10 most expensive cities globally.
“The affordable villa segment in both sale and rent essentially showed signs of growth, indicating there continues to be undersupply,” states the report.
Analysis of the portal’s traffic, which represents 55 percent of online searches for property to rent or buy in the UAE, shows over half of Dubai online rental searches are for homes advertised at 100,000 dirhams per year or less, yet properties within this range account for only 25% of the listings.
Propertyfinder’s chief operating officer Paul Stewart-Smith says: “With developers now being able to look into market trends and searches with more granularity and certainty, we expect to see more affordable and relevant housing being built.
“The compromise now lies on the location, as these affordable communities are being built on Emirates Road; the distance to work, an evening out or at the beach becomes that little bit further and the “attractiveness” of living in Dubai fairly compromised.”
The report reveals some conflicting trends – insipid regional growth of the economy and increased competition among developers has distressed prices, particularly in Dubai’s “emerging” communities, yet some of these neighborhoods still provide world-class yields.
A case in point would be, Discovery Gardens gave an August yield of 10.4 % – the highest in the UAE – despite advertised rents dipping by 18.3 % in 2016. The luxurious villa district Emirates Hills, in contrast, delivered a yield of just 3 %, the lowest in Dubai.
High-end communities in both Dubai and Abu Dhabi have proven to be more resilient this year with modest single digit declines in their median advertised sales and rental prices in 2016, as per propertyfinder data.
“We’ve seen property seekers shifting towards data-driven decisions when it comes to buying or letting out: they map-out the whole market and communities before deciding where to rent or invest,” says Paul Spargo, propertyfinder.ae Commercial Director.
“We aim to streamline the journey by giving, in addition to quality listings, the data needed for making the fastest decision when it comes to buying or renting, prices and trends, nearby amenities, school finder, property ranking, etc..”
In Dubai, differences between what potential renters and buyers would pay vis-a-vis the asking price of landlords and sellers vary phenomenally across districts.
Would-be buyers in Dubai Marina and JLT, which along with Downtown Dubai are the most-viewed communities for apartments, look out for discounts of 20 to 32 % respectively on advertised prices, thus indicating, price pressures will persist. Yet in Downtown Dubai, prospective buyers would be ready to pay in excess of the asking price.