Addressing what the market really needs
Oft heard in the UAE in daily real estate related conversations in transit, at work or on the street, is the question: why aren’t developers working on projects for the low to middle income segment of the population? The answer seems to be simple enough for some: there’s no money in it. How ever, going beyond the ROI objective, Mohanad Alwadiya of Harbor Real Estate talks about welcome changes in the property market that ad- dress the needs of the low to middle income group.
Logic behind ‘location’
Location is the primary consideration of any real estate practitioner when appraising property. The importance of location cannot be underestimated because it is a prime determinant of property value which is usually derived from the levels of life style convenience, pleasure, harmony, security, future economic value or even status that can be derived from the property. Be it an outstanding view or proximity to dining, entertainment and business districts, or access to schools, hospitals or public transport, or being neighborly with some celebrity types, the perceived benefits that a location may bring to a prospective buyer can account for up to 90% of a property’s value.
The importance of location is a global truism, and in Dubai, it is no different. Locations close to the beach and entertainment areas such as The Palm, Dubai Marina and JBR will command a location premium as will properties close to or within Downtown,CBD or DIFC. Properties with ocean views or overlooking golf courses such as The Greens always command a premium as most potential buyers consider a view to be a key feature of their home.
The decision to build particular types of properties in particular locations will be driven by the objective to maximize the economic value of the development.
Property for low to middle income segment
The number of developments that will supply housing affordable to the middle and lower income segment is definitely increasing. Established developments most associated with filling the affordable housing gap were International City, Discovery Gardens and MotorCity. But there have been recent additions that have provided realistic alternatives to older developments, and several more to come.Most are located in the Dubailand/Dubai Silicon Oasis areas.
Skycourts has been a huge success in providing a superior quality lifestyle to lower and middle income earners in a well-managed community. Queue Point is currently being delivered to owners, providing a generous mix of spacious apartments and outdoor spaces, and good access to all Dubai districts and neighboring emirates. La Vista Residence, with its modern design, great range of amenities and good location in the ever-developing DSO community, offers. comfortable yet affordable living.
Changes needed to sustain and support growth
Developers have misread the future segmentation of the Dubai real estate market. Past performance may not be a true indicator of future events; however, learning from the past can eliminate the repetition of mistakes. Unfortunately, many developers have looked at property concepts and specifications that were historical successes but failed to address the fundamental question of what will be needed in the future. As a result, the Dubai market became somewhat “top – heavy” with offerings only the upper middle class and wealthy could afford. People decided to reside in affordable emirates like Sharjah and Ajman.
As the economy of Dubai develops and grows, it will experience many changes in the various components that help make it function. One of these will be the composition of the population that provides the intellectual capital, expertise and man power that, without which, the economy would stagnate or :regress. A natural occurrence is that its middle and lower-middle income segments will expand to support the rapid rise in commercial activities and economic initiatives. Some astute developers identified the future opportunity to provide housing for this burgeoning segment while others chose to rely on old formulae.
I believe the more astute developers have now awakened to the need and opportunities that affordable housing provides. Many have learnt that it is pointless building mansions if there is no one to occupy it. They just become monuments.
New affordable location in Dubai
• Skycourts – it has enabled many to purchase their first home and demonstrated that housing can be made affordable and still provide an enriched lifestyle
• Queue Point – the development is of high quality at par with international standards and, while commanding a purchase price of Dh750 per sq .ft., represents great value in today ‘s market
•La Vista Residence – with two-bedroom apartments available from Dh39, 000, this community truly represents amazing value