Dubai needs more affordable housing units

Although the market shows signs of slowing down, lower and middle income families remain squeezed

Developers are generally reluctant to build affordable housing. Sarah Dea / The National

For the past three years, Dubai rents have risen markedly. As The National reports today, rents in some parts of the emirate are now on a par with those in New York, according to statistics released by the classifieds website Dubizzle. That data is, however, just a small part of the overall property picture that is beginning to emerge.

As this newspaper reported yesterday, average residential rentals fell by 1 per cent in the past three months, after 10 consecutive quarters of growth. How much of that drop might be attributed to the traditional slow down of the market during the summer months remains to be seen. The sales sector also appears to be slowing down as a combination of new regulation and the natural cycle of the market. Even with that brief drop, however, the rental market in Dubai is tough on those on modest incomes. This includes, naturally, the "bachelors" who make up the backbone of workers. But it also includes those who might be called lower middle-class, working families who find the combination of school fees and rent too much to bear. Many families squeezed by higher costs have relocated to Sharjah, Ajman or farther afield in the Northern Emirates, causing social upheaval and troubles commuting.

On balance, helping these workers keep their families with them – rather than sending them back home – is beneficial to society, avoiding some of the problems of a demography excessively skewed towards single men.

One answer to this problem could be to build more affordable housing. According to one estimate, Dubai will have to supply 100,000 units of affordable housing to meet demand by 2020. Developers are generally reluctant to build affordable housing because of the greater returns of higher-end properties. Government incentives could help, as could legislation requiring a certain number of units per building to be set aside as affordable housing. Neither, of course, is a perfect solution, but a bit of tweaking of Dubai’s rental market would be helpful.