Time for affordable housing in Dubai is now
Filed on January 27, 2016 | Last updated on January 27, 2016 at 07.54 am
With property prices going down, more home ownership very likely
Investors looking to purchase property in Dubai will benefit the most should they decide to invest in the affordable luxury segment, the top official of one of the Middle East’s largest building materials company said.
“Today, if you look at the UAE property market, you will notice that it is very slow, but for those people that have plans to stay here for the long term, the best choice would be to invest in the affordable property segment,” Danube Group founder and chairman Rizwan Sajan said at a Press conference in Dubai on Tuesday.
“You will be really rewarded if you invest in Dubai now.”
The event sought to highlight the Ritz by Danube project as a preferred choice for a home in Dubai, with stars such as Bollywood icon Anil Kapoor investing in the development.
With property prices coming down to a more realistic level that are becoming attractive to the end-users, there is a possibility of a large-scale migration to home ownership, from rental homes.
The Ritz by Danube development is designed to fulfill an important gap in the market, and will appeal to new couples and small families, who are on the move and want a cozy, ready-made home with fitted-in furniture.
“We know that 80-85 per cent of people today are living in rented apartments, and that they are all thinking of owning their own apartment. Today we are a population of 2.4 million in the UAE, which the government is targeting to reach 3.4 million by 2020,” Sajan said.
“This is a growth of nearly a million people, and we know that all of them will not be white-collar workers. If we assign four people to each family, then we have an estimated 125,000 apartments that will be required in the next five years.”
Citing statistics, Sajan said that in Dubai, only 12,000 apartments and villas were delivered during 2015. With this slowdown, Danube expects a lesser number of apartments to be delivered in the next five years.
This means, Sajan points out, that against a demand for 125,000 apartments, there will be an expected delivery of only 60,000 to 75,000 apartments in the next five years – resulting in rents and property prices going up even more.
“So, if we ask ourselves whether this is the right time to invest in property especially in the affordable segment, then the answer is a resounding ‘yes’,” he added.
His predictions echo that of Hussain Alladin, head of research at GCP Properties, who described Dubai as a buyer’s market, with prices moving lower and developers offering not only discounts, but also an increasingly imaginative array of payment plans in order to stimulate purchases. “We believe that this trend will continue for the foreseeable future, until renewed spending catalysts and an expansionary fiscal policy take hold in the economy,” Alladin added.
With Dubai’s property prices remaining lower compared to global hub cities such as London, Mumbai, Singapore and Hong Kong, the new low-price environment offers a great opportunity for consumers to benefit from not only the asset but the price appreciation of the asset when delivered.
In addition, Dubai offers one of the highest rental yields of eight ot 10 per cent in the worst-case scenario. In most cases, the value addition leads to a rental yield of around 10-12 per cent – which means an end-user spends 10-12 per cent of the home price in yearly rent.
The Ritz is Danube Properties’ third major project after Dreamz and the Glitz trio, and takes the total value of the group’s real estate portfolio to Dh1.5 billion.