Middle East affordable housing sector is characterized by a substantial lack of new supply both in the sales and rental markets, a recent report by JLL, an influential market researcher, said.
Lack of the middle-priced property is observed everywhere: in Egypt, Saudi Arabia and the UAE. This category traditionally includes those property offers, which middle-income earners can afford without spending more than 30% of their salary on housing issues. For the UAE, according to JLL, property is considered affordable if it costs around USD 215,000 in the sales segment and about USD 19,000 per year in rental segment.
"The importance of the middle-income sector of the market should not be under estimated, as it accounts for over 60 percent of all household in both Saudi Arabia and Egypt. That equates to 3.3 million households in Saudi Arabia and 12 million in Egypt," JLL said.
"The relative numbers in the UAE are smaller, but there are still over 820,000 middle income households, representing almost 40 percent of all households in the UAE."
In 2011, according to statistics, the total need for affordable housing in these countries was not less than 3.5 million new homes, but since then, according to JLL, the lack has only increased. Only 22% of real estate projects launched in 2015 in the UAE fall into affordable housing category by JLL’s definition.
Craig Plumb, head of research at JLL MENA, said: "Whilst none of these solutions are easy, we believe that working together, governments and developers can address the shortfall that JLL has identified in this report.
"Governments around the region have started to allocate significant financial resources to encourage more development of middle-income housing, but more needs to be done. We believe there is a need to re-think the existing relationship between Government and the real estate development industry to create more affordable housing that middle income families can afford.
"We also recommend more innovative planning and design initiatives to create more attractive, environmentally sustainable and cohesive communities as well as accessible financing, empowering middle income families to take a stake in their future."