Can the UAE force the private sector to work in the affordable housing market?
The government needs to give the private sector more incentives to encourage investment in the affordable housing market, which traditionally has low profit margins, industry experts said.
Public-private partnerships (PPPs) is the long-term solution to increase the supply of affordable housing in the market, they said yesterday at the MENA Mortgage and Affordable Housing Congress.
Traditionally, the government has directly intervened in providing affordable homes but it needs to shift towards being an “enabler” of private sector participation, Maysa Sabah Shocair, MENA advisor at the Affordable Housing Institute, told Gulf News.
Incentives should include “inclusionary zoning” which means the government should allocate a certain percentage of all new housing projects as affordable units, she said.
The government must also require banks to allocate a certain percentage of its business for lending to affordable housing customers or developers, she said.
However, many locals have a preference for living in villas but these are 50 percent more expensive to construct and are ecologically unsustainable, Ramy Echo, chief investment officer with Alargan International Real Estate company.
To overcome this, GCC youth should be educated on the environmental implications of villas to create willingness to change and move into apartments, said Shocair.
The government should given incentives for banks to lend developers, adjust property regulations to promote affordable housing, give developers tax breaks and address the availability and cost of land, panelists agreed.
The private sector needs large volumes of these housing units to make profit, so the trend in future will be towards large-scale projects, said Echo.
A growing population and a demographic dominated by young people means the demand for affordable housing in the region is urgent—as shown by the social, political and economic uprisings that swept the Arab world, panelists said.
Shift from luxury housing
Private developers need to shift their focus from the luxury market to consider the volumes to be had in affordable housing, panelists said.
“Everyone can see that normal properties cannot be afforded by the middle and lower income class because they are expensive. They need more than a lifetime to pay back,” said Mohammad Al Merri, assistant chief executive at the Mohammad Bin Rashid Housing Establishment, when asked about the need for affordable homes.
In terms of affordable housing for expats, there is a “feeling that the market correction would take care of it but there are still expats living in crowded conditions” said Shocair.
The government understands that what happens in the affordable housing market for expats will also be applicable for locals and that they cannot be separated, she said.
- The reality of realty: inbound property investments in GCC 'far less' than outbound
- Dubai's hospitality sector is a sound investment
- Quiet and wise: How Oman is transforming itself into a major logistics hub
- Revealed: the top real estate tycoons in the ME
- Why did no one invest in the Suez Canal during the Economic Summit?
- GCC Investment Strategy and Sectors Outlook for 2006
- What is the solution to affordable housing in Dubai? Creating a middle ground might be the answer
- Affordable Housing Offers Significant Opportunities for Investors and Developers in Saudi Arabia
- Affordable housing is key to Saudi Arabia's social development