Taylor Scott International News
A proposal by Dubai Municipality to introduce mandatory affordable housing quotas for all new residential developments is expected to bring a wide range of benefits to the emirate, it is claimed. The move will create further maturity in the market and is long overdue, according to a new report from international real estate consultants, Cluttons. With the residential market in Dubai now meandering through the second half of the current property cycle and with values stabilising following the tremendous growth recorded in 2013 and the first half of 2014, the timing for the introduction of such legislation is ideal, the firm says. According to Steven Morgan, chief executive officer of Cluttons Middle East, the issue of affordability has been one that has been quietly bubbling away in the background for some time. ‘With the introduction of the Federal Mortgage caps and the doubling of property registration fees, we saw genuine end users in the market forced into a holding pattern as they attempted to make the transition from rented accommodation to owner occupation,’ he said. ‘The surging rents, driven by the exceptionally strong underlying demand, which was linked to the robust economic growth, meant that household finances were coming under tremendous pressure on several fronts,’ he pointed out. ‘Now of course, with rents starting to show greater stability, households have a window of opportunity to consolidate their finances and make that leap to owner occupation. The prospect of those on monthly incomes of between AED4,000 and AED12,000 being able to control their rental outgoings will no doubt go some way to aiding the speed at which deposits can be amassed,’ he added. He also pointed out that it is important to remember that there is a huge pent up demand for affordable housing in the UAE and with rental affordability thresholds being breached in many cities, we welcome the news on this key issue. According to Cluttons, the idea of affordable housing is not a new concept and it has served cities such as London well, where developers are liable to provide affordable housing for developments starting with as little as ten units. In particular it has aided in the creation of diverse communities, while allowing people from all financial backgrounds to live alongside one another. ‘There have of course been exceptions to the rule, where developers have been permitted to build off-site affordable housing, with land costs being cited as the primary driver for this. Dubai stands to learn a valuable lesson from this as the authorities in London have often been criticised for effectively creating lower income neighbourhoods through this method,’ said Cluttons' international research and business development manager, Faisal Durrani. He explained that Dubai is clearly not short of affordable neighbourhoods. Karama and Satwa are two key stand out areas that evolved organically at the edges of the Deira-Bur Dubai and Jumeirah districts, respectively. ‘During the course of expansion of any city, affordable districts often tend to spring up on the fringes… Taylor Scott International
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