The Middle East and North Africa (Mena) region is facing an acute shortage of affordable housing, with a substantial lack of low-cost homes reported in Egypt, Iraq, Morocco and Saudi Arabia.
The problem is expected to become far worse during the next five years, owing to chronic under-investment in homes for low-income families and the rapid rate of population growth in the region, according to a report from Jones Lang LaSalle.
"While there is currently a significant over-supply of upscale or luxury housing in many markets, there remains a shortage of more than 3.5 million affordable dwellings across the major markets within Mena," the report said.
Inflated land values, high borrowing costs related to infrastructure and underdeveloped mortgage markets were the key factors inhibiting construction of affordable housing in these markets, the report said.
In the UAE, government efforts to subsidise housing for Emiratis have resulted in expatriate families struggling further to find low-cost housing, creating a shortfall of about 20,000 homes.
"In markets such as the UAE, the shortage of affordable housing disproportionately impacts expatriates [as the government provides free land and low-cost finance to assist Emirati families]," the report said.
However, the shortage of housing leaves many low-to-middle income expatriates forced to share apartments in the capital to save cash, with an average of two families to every dwelling last year.
By contrast, Dubai's recent plunge in property prices has effectively solved the problem of providing low-cost housing rental rates, the report said.
The report classifies low-income housing as affordable if it costs less than 35 per cent of the income of low-income households, definitions of which vary from country to country. In the UAE, low income is defined as a household with a monthly income of Dh9,000 or less, with the population of such households numbering about 390,000. Many governments in the Gulf have taken measures to increase access to low-cost housing in the wake of the Arab Spring. King Abdullah bin Abdulaziz Al Saud of Saudi Arabia announced a plan to build 500,000 homes in March to combat fears of unrest in the kingdom.
Meeting the housing shortfall would create challenges for many construction companies and property developers across the Mena region, said Majed Azzam, a property analyst at AlembicHC.
"We don't think it's going to be easy," he said. "Affordable housing seems to be something on the backburner right now," he said.
"So far a lot of developers haven't felt any motivation to pursue this line of product."
Properties for high-income individuals created much higher margins for developers so they tended to under-invest in the low-income market, Mr Azzam said.
Attempts at providing low-cost housing in Egypt had also proved difficult for some of the country's developers, whose affordable housing units proved a flop.
Developing public-private partnership between governments and developers was one way to stimulate construction of affordable housing, said Matthew Green, the head of research at CB Richard Ellis.
"The price you pay for the land governs what you need to build to make it profitable," he said. "Looking at the land prices, and you're struggling to make money with high-end properties feasibly."
Since many developers struggle to make a profit on affordable housing, subsidies may be necessary to spur growth, he said.
ghunter@thenational.ae
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How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
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UAE currency: the story behind the money in your pockets
TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
The language of diplomacy in 1853
Treaty of Peace in Perpetuity Agreed Upon by the Chiefs of the Arabian Coast on Behalf of Themselves, Their Heirs and Successors Under the Mediation of the Resident of the Persian Gulf, 1853
(This treaty gave the region the name “Trucial States”.)
We, whose seals are hereunto affixed, Sheikh Sultan bin Suggar, Chief of Rassool-Kheimah, Sheikh Saeed bin Tahnoon, Chief of Aboo Dhebbee, Sheikh Saeed bin Buyte, Chief of Debay, Sheikh Hamid bin Rashed, Chief of Ejman, Sheikh Abdoola bin Rashed, Chief of Umm-ool-Keiweyn, having experienced for a series of years the benefits and advantages resulting from a maritime truce contracted amongst ourselves under the mediation of the Resident in the Persian Gulf and renewed from time to time up to the present period, and being fully impressed, therefore, with a sense of evil consequence formerly arising, from the prosecution of our feuds at sea, whereby our subjects and dependants were prevented from carrying on the pearl fishery in security, and were exposed to interruption and molestation when passing on their lawful occasions, accordingly, we, as aforesaid have determined, for ourselves, our heirs and successors, to conclude together a lasting and inviolable peace from this time forth in perpetuity.
Taken from Britain and Saudi Arabia, 1925-1939: the Imperial Oasis, by Clive Leatherdale
Sreesanth's India bowling career
Tests 27, Wickets 87, Average 37.59, Best 5-40
ODIs 53, Wickets 75, Average 33.44, Best 6-55
T20Is 10, Wickets 7, Average 41.14, Best 2-12
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now