Mandatory affordable homes in dubai? About time, says cluttons

Photo: Sboyd

The proposed Change is expected to bring a wide range of benefits to the emirate, argues the consultancy, while driving further maturity in the market.

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", argues Steven Morgan, CEO of Cluttons Middle East.

"The issue of affordability has been one that has been quietly bubbling away in the background for some time," he explains. "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.

"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."

With rents now showing signs of stabilisation, he argues that households have a "window of opportunity" to consolidate finances and leap into homeownership.

"The prospect of those on monthly incomes of between AED 4,000 and AED 12,000 being able to control their rental outgoings will no doubt go some way to aiding the speed at which deposits can be amassed," he comments  "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."