(12 Sep 2017) LEADIN:
Governments across the Gulf are facing an urgent need to create an affordable housing market which is accessible to the next generation.
Tens of thousands of luxury projects were displayed at Dubai's annual Cityscape event, but experts acknowledged the issues for younger buyers.
STORYLINE:
Golden lights shine out from the windows of a scale model of one of the latest developments in store for Dubai: the Oriental Pearl.
It's one of tens of thousands of luxury projects on display at Dubai's premier property show Cityscape.
However, notably absent from the glittering mock-ups and housing dreams are more affordable housing projects for the region's large and burgeoning population of young and aspiring home owners.
Property analysts say oil-exporting countries in the Gulf are facing an immediate need to create more affordable housing.
"I think the issue we have got is that we don't fully understand the true definition of affordable housing across this region. Every market has got affordable housing issues, Dubai in particular and Saudi Arabia," says Faisal Durrani, Head of Research at Cluttons.
"We have got very large populations of aspiring home owners, you have got house prices that have been growing quite rapidly over the last few years and actually when you factor in the fact that the cost of living has been rising, we have got VAT on the cards."
He adds that the challenge is that there is still no clear definition by governments in the Gulf for what constitutes affordable housing. People are often paying half of their salaries or more on rent, instead of the target benchmark of around 30 percent.
The price of living in the Gulf is currently rising with the lifting of subsidies on food and energy and the introduction of a new taxation system as governments try to offset the impact of lower oil prices on state revenues.
Once awash in oil revenue, Gulf governments have had to contend with the impact of lower oil prices for the past three years.
Here at Cityscape developers from across the Middle East are unveiling their latest projects, many still off plan, in order to pitch to investors wishing to grow their portfolios.
Some are showing off high-rise towers with two and three bedroom apartments starting at well over half-a-million dollars, which wont be handed over until 2020 at the earliest.
"A number of developers are launching more affordable projects but they are still not really reaching the real price point that they need to be getting," says Craig Plumb, head of research for the Middle East and Africa at investment company Jones Lang LaSalle (JLL).
Plumb adds that the price of an affordable two-bedroom apartment is more commonly the price of a studio in Abu Dhabi, for example. The newer, lower priced projects which are being promised are also not always in prime locations, but out in the desert in areas which are inaccessible to mass transportation systems.
Al Dar properties, in Abu Dhabi is launching a new development called Water's Edge. The key demographic for the development is mid level buyers says Chief Development Officer, Talal Al Dhiyebi.
But Plumb says it is not enough. A lot of developments are just making apartments smaller and prices are still not as low as they should be.
"What we are finding is that a number of developers are re launching previously luxury projects. They are perhaps reducing the size of them slightly and they're now re-advertising them as affordable. We don't believe that's actually affordable to a large proportion of the population," he says.
Cityscape runs until 13 September 2017.
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