In recent years, the real estate market in Dubai has experienced significant changes that have affected various sectors of the population. Affordable housing, which once represented a viable option for many residents, is facing a notable decline in sales.
This trend, which has solidified over the past six years, raises concerns among both industry experts and potential buyers. The rising cost of living and changes in the strategies of real estate developers have been identified as key factors in this issue.
The decline in sales of affordable housing in figures.
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According to recent data, properties below 1 million AED (272,000 dollars) reached their peak, representing 46% of all residential transactions in Dubai during the third quarter of 2018. However, this figure has been decreasing steadily.
In the third quarter of this year, the proportion of affordable housing sales fell to a minimum of 29%. This decline reflects a worrying trend for those seeking to acquire a home in the emirate without incurring excessive expenses.
Meanwhile, home sales in the range of 1 to 3 million AED have increased, rising from 39% to 49% of all transactions in the same period. This indicates a shift in the market towards higher-value properties.
CHANGES IN THE STRATEGIES OF REAL ESTATE DEVELOPERS
Real estate developers in Dubai have reoriented their efforts towards the luxury and upper-middle-class markets. Companies that traditionally focused on affordable housing are seeking to expand and strengthen their brand in more profitable segments.
The possibility of obtaining better returns has led developers to build properties in more exclusive areas. Renowned firms have adopted this strategy, focusing their projects on branded residences and partnering with luxury companies.
This approach not only increases the prestige of developers but also attracts a wealthier clientele. As a result, the supply of affordable housing has decreased, affecting middle and low-income residents.
THE IMPACT OF THE INCREASE IN THE COST OF LIVING IN DUBAI
The overall increase in the cost of living is another factor contributing to the decline in the sale of affordable housing in Dubai. Although in some cases mortgages may be more economical than rents, many residents face difficulties accessing them.
Financial constraints and the inability to qualify for a mortgage limit housing options for the working class. Additionally, the rise in land prices and the scarcity of available plots have increased construction costs.
This situation has led many to reconsider their stay in the emirate, as rising expenses are not limited to the real estate sector. Other factors like high school fees and rent increases have contributed to the exodus of residents.
Future prospects and possible solutions
Despite the current outlook, there are developers who continue to focus on building affordable housing in new areas of Dubai. Areas such as Dubailand, Al Yufrah 1, Dubai Investments Park, Jebel Ali Industrial Area, and Dubai South are emerging with promising projects.
These initiatives are expected to increase the availability of affordable housing and offer more viable options for middle and low-income residents. Additionally, Dubai authorities are taking steps to address this issue.
As part of their new Real Estate Strategy 2033, recently presented, the government plans to implement policies that promote the construction and availability of affordable housing. These actions could balance the real estate market and address the needs of the middle class
