Just in:
French Leaders Gather for Interfaith Iftar Dinner // Universal Language for Healthcare: General Authority Embraces Global Coding System // 2024 Lok Sabha Elections Will Be The Costliest One Till Now In The Whole World // New Nylon Constant Torque Hinge From Southco Provides Position Control In A Compact Package // Sharpening the Focus: Sharjah Health Department Refines Evaluation Criteria for “Healthy Schools Programme” // Ajman Celebrates Conclusion of Ramadan Activities with Grand Ceremony // Following the Money Trail: US and UK Investigate $20 Billion in USDT Transfers Tied to Sanctioned Russian Exchange // First-Ever Fortune Innovation Forum Draws Top Global Leaders to Hong Kong, Promoting Agendas On Collective Cross-Sector Advancement // Konica Minolta is named ASEAN 2023 Market Leader in Colour Light and Mid Digital Production Printers // Infineon and HD Korea Shipbuilding & Offshore Engineering jointly develop ship electrification technology // TUMI Hosts Global Launch Event in Singapore to Unveil Women’s Asra Collection and Announce Global Ambassador, Mun Ka Young // Ingdan Announces 2023 Annual Results // Saudi Arabia Unveils Green Financing Tool to Achieve Net-Zero Goals // Experience Ultimate Shopping Freedom at 4.4 Shopee Spree: Don’t Worry, Shop Shopee! // US reiterates concern over Kejriwal arrest, Cong accounts // Andertoons by Mark Anderson for Fri, 29 Mar 2024 // Arvind Kejriwal Was Used By BJP In 2011 Movement To Take On The Congress // Sunshine’s Debut Features Leave Tech World Scratching Its Head // Emirati Aid Reaches Ukraine as Food Shortages Bite // U.S. Compliance Takes Center Stage at OKX Following Industry Jitters //
HomeFeatured BlogsShortage of 'Middle-Income' housing is a major issue in the MENA region

Shortage of 'Middle-Income' housing is a major issue in the MENA region

UAE.  JLL, the world’s leading real estate investment and advisory firm, has today published a special report on the middle-income housing segment in the Middle East and North Africa region.

The report highlights the social and economic impact of a marked shortfall in the required supply of middle-income housing, suggesting that significant efforts are needed to address the current imbalance.

The report clearly outlines that this shortage is an important and consistent issue across all three major MENA markets (KSA, Egypt and the UAE), While there is a general recognition of the problem and a growing number of policy initiatives and projects targeting the middle income sector, more needs to be done if the current shortage is not to widen further before it is reduced.

ADVERTISEMENT

Middle-Income’ Housing Defined
JLL defines ‘middle-income’ housing as that provided by the market which is affordable to the middle tranche (i.e. 40-60%) of households on the assumption that they spend no more than 30% of their gross household income on housing.

The report excludes labour accommodation and national housing projects where accommodation is provided by major employers for their workers or governmental agencies for  local citizens.  It identifies two major components to the market, properties for sale and those for rental, as many middle income households cannot purchase property due to either regulatory restrictions or a lack of available capital and finance.

The definition of affordable varies across the region in terms of ‘price point’.  JLL’s  report indicates that an  ‘affordable’ sales price in the UAE is currently circa AED 790,000 with an affordable annual rent of around  AED72,000. In KSA the affordable sales price is circa SAR 450,000 and the affordable annual rent is circa SAR47, 000. While in Egypt, the affordable sale price is circa EGP285, 000 and annual rent around EGP 32,000.

The importance of the middle–income sector of the market should not be under estimated,  as it accounts for over 60% of all household in both KSA and Egypt. That equates to 3.3 million households in Saudi Arabia and 12 million in Egypt. The relative numbers in the UAE are smaller, but there are still over 820,000 middle income households, representing almost 40% of all households in the UAE.

Shortage of ‘Middle-Income’ Housing
In 2011, JLL identified the need for an additional 3.5 million affordable homes across the region. This gap has almost certainly increased over the past 5 years as the vast majority of developments delivered and conceived throughout MENA over this time, have been aimed at more affluent households.

ADVERTISEMENT

Only 22% of residential units launched in 2015 to date in Dubai are ‘affordable’ to ‘middle-income’ households according to JLL’s definition, while  we have not seen any residential units being launched this year that meet our definition of ‘affordable’ in the other markets.

Overcoming the Challenges to Middle-income Housing
JLL’s report highlights several factors that have contributed to the current shortage of affordable housing. 

These include:

– High land values which have reduced access to affordable land
– High capital costs for associated infrastructure development such as roads,  electricity and sewerage
– Low adoption of prefabricated construction techniques have contributed to higher construction costs
– Lower financial returns compared to other residential sectors, making such developments less attractive for developers
– Limited access to suitable finance for low income families, due to generally immature mortgage markets

The complexity of these factors means that solutions are not necessarily easy to find. The report suggests that resolving the shortage of middle-income housing requires a concentrated effort involving government agencies, private developers and other stakeholders, focusing on six key factors:

– Providing developers with access to affordable land.
– Reducing the cost of infrastructure and land servicing costs borne by affordable housing projects.
– Promotion of industrial approaches to construction and more unified, large scale procurement processes to reduce construction costs.
– Adapting developers’ business models to make affordable homes more attractive.
– Improve access to mortgage financing through regulation and encouragement of financial services industry to allocate certain funds  middle income households.
– Regulate the delivery of affordable homes and ensure ongoing affordability. Dubai’s RERA has shown that rental caps can protect middle-income households from spiraling rent increases.

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.”

Plumb also highlights several examples of best practice that offer some hope that changes are already beginning to take root.

“Developments such as Nshama’s Town Square in Dubai show that private sector developers are able to deliver affordable product for middle-income households in the UAE.  Elsewhere in the region, timely government initiatives such as the launch of the KSA Ministry of Housing‘s ‘ESKAN’ project should result in progress towards the supply of 500,000 affordable units as it aims to increase the proportion of homeowners in the Kingdom. In Egypt, both Arabtec and Orascom are also contributing significantly to the need to provide more affordable homes”.

Photo Caption: Craig Plumb, Head of Research at JLL MENA,

This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.

ADVERTISEMENT

ADVERTISEMENT
Just in:
U.S. Compliance Takes Center Stage at OKX Following Industry Jitters // French Leaders Gather for Interfaith Iftar Dinner // Universal Language for Healthcare: General Authority Embraces Global Coding System // First-Ever Fortune Innovation Forum Draws Top Global Leaders to Hong Kong, Promoting Agendas On Collective Cross-Sector Advancement // Following the Money Trail: US and UK Investigate $20 Billion in USDT Transfers Tied to Sanctioned Russian Exchange // AIA Hong Kong Wins More Than 20 Accolades at MPF Ratings MPF Awards, BENCHMARK MPF of The Year Awards and Bloomberg Businessweek Top Fund Awards // Experience Ultimate Shopping Freedom at 4.4 Shopee Spree: Don’t Worry, Shop Shopee! // Sunshine’s Debut Features Leave Tech World Scratching Its Head // Andertoons by Mark Anderson for Thu, 28 Mar 2024 // Melco Style Presents “SANRIO CHARACTERS STUDIO CITY CARNIVAL” – Explore a SANRIO World of Unlimited Love and Cuteness // Andertoons by Mark Anderson for Fri, 29 Mar 2024 // Saudi Arabia Unveils Green Financing Tool to Achieve Net-Zero Goals // US reiterates concern over Kejriwal arrest, Cong accounts // Arvind Kejriwal Was Used By BJP In 2011 Movement To Take On The Congress // Konica Minolta is named ASEAN 2023 Market Leader in Colour Light and Mid Digital Production Printers // TUMI Hosts Global Launch Event in Singapore to Unveil Women’s Asra Collection and Announce Global Ambassador, Mun Ka Young // Emirati Aid Reaches Ukraine as Food Shortages Bite // New Nylon Constant Torque Hinge From Southco Provides Position Control In A Compact Package // 2024 Lok Sabha Elections Will Be The Costliest One Till Now In The Whole World // Hope for Respite as UAE Endorses UN Plea for Gaza Truce //