With the luxury and high-end property segment showing signs of slowing down, there has been a significant shift in the Dubai Real Estate sector towards affordable housing projects. For long now, investors and developers alike have focussed only on the affluent section, leaving a gap in the market. There were very few projects that specifically targeted the mid-income sector.
Quest for affordable housing pushing crowd to city fringes
The mid-income sector forms a large chunk of the Dubai population. High property prices and rents have pushed a good many of them to the city fringes, away from the city centres. Sharjah has become a particularly attractive location, as it provides affordable housing options. However, the longer commute time and traffic ques take a toll on those who need to travel on a daily basis.
Current Dubai market going through a property cycle
Although the rental market has remained more or less sturdy, the property prices have taken a hit in the last couple of years. As a result of this, more and more mid-income families are inspired to escape the rental cycle and become owners. However, the stringent UAE mortgage rules make it mandatory for a prospective buyer to deposit 25% of the property’s value for a ready-to-move property in advance. The initial deposit for an off-plan property is 50%. The large initial deposits have deterred many from having homes of their own.
Developers entice buyers with attractive payment plans
To provide some degree of respite and attract buyers, developers have taken to enticing payment plans. As per these plans, buyers need to pay a small initial upfront deposit. The initial deposit is to be followed by a number of instalments at several stages of the property’s development. The sums that are paid, prior to handover, vary from 30-50% of the property’s value, depending on who the developer is. Buyers can pay the rest of the amount at the time of taking possession. In some cases, the easy payment plans make it even possible for a buyer to pay after taking possession. To secure the interests of the buyer, all amounts paid before the handover, are held in an escrow account.
Mid-income section driving demands for affordable housing
The Dubai real estate market, particularly the high-end section, at the moment, is sluggish. Investors, developers, and other stakeholders are aware of the fact that the market, at present, is going through a phase of price correction and that the market shall recover soon. Until the high-end market picks up, there’s money to be minted in the huge gap created by the absence of properties for the mid-income demography.
Developers filing in to meet the demand
A number of developers have stepped in to fill this gulf in the market. Aware of the growing demand, many of these developers have announced projects that are affordable, attractive and loaded with decent features.
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