It is reported that Abu Dhabi faces a “major shortage” of affordable
housing, with most people unable to buy property and annual rents for
two-bedroom homes as high as USD 49,000, the Cityscape exhibition heard on
Tuesday.
Experts pointed to a “huge mismatch” between the price of homes in the capital
and average UAE salaries, which one consultant estimates at USD 4,600 a month.
Mr David Dudley, regional director at the consultancy JLL, pointed to the
shortfall in cheaper properties in an address on the opening day of Cityscape
Abu Dhabi, which runs until Thursday.
Mr Dudley said that “There is a very major shortage of affordable housing.”
But Aldar, the UAE capital’s biggest developer, this week launched its first
properties geared towards middle-earners - and some say other property firms
will follow.
Price hikes
Property in Abu Dhabi has got a lot more expensive, with sale prices
skyrocketing in the recovery after the financial downturn.
According to JLL, the market - like that of neighboring Dubai - was hit hard during
the economic crisis. But prices have rallied since, growing by 25% in 2013 and
2014 - a rate that is “not sustainable.”
According to research by property consultancy Cluttons, Abu Dhabi rental prices
have also been increasing, up by 17% in 2013 and 11% in 2014, according to JLL.
The consultancy forecasts “single-digit growth” in rents this year. A
two-bedroom apartment in high-end areas of Al Raha Beach and on Saadiyat Island
now cost an average of AED 180,000 per year.
Mr Faisal Durrani, international research and business-development manager at
Cluttons, said that developers were not currently meeting the need for cheaper
housing.
Mr Durrani said that “There is a huge pent-up demand for affordable housing.”
He said that the average salary in the UAE is between AED 16,000 and AED 18,000
a month, which works out at around USD 4,600. That makes it difficult for many
residents to buy property given the current prices.
He added that “Most development across the UAE has been skewed towards the
luxury end.”
He further added that “When you factor in the high cost of living and the fact
that average salaries have largely not kept pace with house-price increases and
rental growth, you’re creating this vast vacuum in the market where you need to
fill it with affordable housing.”
Source: steelguru