There is increasing demand for affordable homes in Dubai as more residents choose to settle long-term and purchase homes amidst rising rents.
Several projects are underway in areas such as Arjan, Dubailand, Al Furjan, Majan, Dubai Sports City, Dubai Production City, Dubai Silicon Oasis, Damac Hills, Damac Hills 2, and Jumeirah Village Triangle.
Developers like Damac Properties, Samana Developers, Binghatti, Danube, ZaZen, Sol Properties, and Iman Developers are constructing projects aimed at middle-income earners with monthly salaries ranging from Dh10,000 to Dh25,000 ($2,720 to $6,800).
“Many end-users are now looking for more affordable housing due to the rising cost of living, driven by higher rents and yields,” said Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core.
Buyers with a household income between Dh20,000 and Dh25,000 can afford homes priced around Dh1.2 million, allocating 30% of their income to mortgage payments, she noted.
The availability of flexible payment plans for off-plan projects is encouraging more buyers and investors to purchase, she added.
Damac Properties offers affordable homes below Dh1 million and in the Dh1 million to Dh1.5 million range, which they label as “affordable luxury,” with locations in Damac Hills, Damac Lagoons, and Business Bay.
Prices depend on the location and amenities. Damac has one-bedroom apartments starting at Dh440,000 in some projects, while their affordable luxury range includes studio units priced from Dh1.073 million. Off-plan prices range from Dh1.06 million to Dh1.32 million.
Payment plans for new projects include a 20% down payment, 4% Dubai Land Department fees, and a 1% monthly payment. For completed projects, buyers must make full payment along with DLD fees.
Damac is developing around 40,000 units across affordable, luxury, and affordable luxury segments.
New projects in areas like Business Bay and Damac Lagoons cater to various investment types, from affordable to ultra-luxury, according to Mohammed Tahaineh, Damac’s general manager.
Samana Developers, based in Dubai, is constructing 29 projects and offers studios in the off-plan segment starting at Dh694,000. One-bedroom units cost Dh1,049,000 at their Dubailand project, with a 15% down payment for local buyers and 20% for international buyers.
The company expects to deliver most units over the next four years in Dubailand, Production City, and Studio City.
“The demand is exceptionally strong,” said Imran Farooq, CEO of Samana. “Eighty percent of what we launch sells out within 72 hours.”
UAE nationals and Dubai residents make up the primary buyers, with additional interest from Europe and Arab nations, purchasing homes for investment, residence, or as second homes in Dubai.
Dubai’s property market rebounded robustly from the pandemic slowdown, driven by initiatives such as residency permits for retirees and remote workers and the expansion of the 10-year golden visa program.
The UAE’s economic growth due to diversification efforts has also supported the real estate market.
Asteco reported that rents and property prices increased during the second quarter of this year. Apartment and villa rental rates rose by 8% and 4%, respectively, while apartment sale prices went up by 5% and villa prices by 8%.
Dubai Land Department recorded 32,109 transactions in the second quarter, a 32% increase compared to the previous year, with total sales value rising 23% year-on-year to Dh63 billion.
Properties priced between Dh1 million and Dh2 million accounted for 33% of total transactions, up from 27% in the same quarter last year, while those priced below Dh1 million made up 34% of deals, down from 38% in Q2 2023, according to data from Square Yards.
Dubai-based Danube recently launched Oasiz in Dubai Silicon Oasis, targeting buyers earning between Dh15,000 and Dh20,000 per month. A studio starts at Dh699,000 with a 20% down payment and a 1% monthly payment plan, equivalent to Dh6,990 per month.
“Instead of paying around Dh6,000 in rent each month, potential buyers can now use that money to own their apartment,” said Rizwan Sajan, chairman and founder of Danube Group.
“This initiative is aimed at first-time homebuyers, young professionals, and mid-level investors seeking to make their first real estate investment in Dubai,” he added.
Binghatti is developing the Binghatti Ghost project in Al Jaddaf, offering studios, one, two, and three-bedroom apartments, with studios starting at Dh867,750.
Sol Properties is also launching affordable homes, with studio prices starting at Dh680,000 and one-bedroom apartments priced at Dh955,000. The developer is building 3,000 units in Jumeirah Village Triangle, targeting individuals earning between Dh10,000 and Dh12,000 per month.
“Many expats, especially those with modest incomes, are increasingly looking for affordable housing options,” said Ajay Bhatia, founder and CEO of Sol Properties.
“Initiatives like the 10-year golden visa and residency for retirees have encouraged long-term settlement in Dubai, increasing demand for affordable and mid-tier housing,” he added.
ZaZen Properties is developing projects in Al Furjan and Jumeirah Village Triangle, with one-bedroom apartments priced around Dh950,000 and three-bedroom units with maid’s rooms priced at Dh2.5 million.
“We’ve seen a growing demand for high-quality, sustainable homes due to the influx of new residents moving to the UAE and Dubai over the past year,” said Madhav Dhar, COO and founding member of ZaZen.
“Today’s buyers are more discerning and are seeking more spacious homes for mid-to-long-term stays, unlike the transient behavior seen in previous years,” he added.
Both the affordable and luxury property markets in Dubai are expanding, though at different rates, according to Danube’s Sajan. “While demand in the affordable segment remains steady, the luxury market has seen faster growth in recent years.”
“This can be attributed to Dubai’s international reputation as a luxury destination and the high standard of living, which attracts high-net-worth individuals and international investors,” he added.
Dubai’s luxury home market reached record levels in 2023, with sales of homes priced above $10 million nearly doubling to $7.6 billion, surpassing London and New York, Knight Frank reported in January.
The emirate’s super-prime market—properties valued at over $25 million—also surged last year, with 56 deals totaling $2.3 billion, twice the previous year’s figure.
Global high-net-worth individuals (HNWIs) are projected to spend $4.4 billion on Dubai property this year, a 76% increase from last year, as demand for luxury homes among the world’s wealthy remains strong, Knight Frank said.
Dubai’s real estate market is still skewed towards the high-end segment, with new luxury developments gaining prominence over the past 12 to 18 months, driven by attractive margins and the demographic profile of expat investors, according to Steve Bramley-Jackson, global head of real estate research at HSBC Bank Middle East.
Affordable homes priced up to Dh1 million “appeal to middle-income earners intending to live in Dubai rather than purely invest,” he added.
The Dubai 2040 Urban Master Plan, announced by Vice President and Ruler of Dubai Sheikh Mohammed bin Rashid, includes the development of affordable housing for middle-income residents, with the goal of making Dubai the world’s best city over the next two decades.
The plan outlines the development of five urban areas and an increase in spaces for education and health facilities by 25%. It also aims to increase population density near mass transit stations.
District 2020, the former Expo 2020 site, is set to become a hub for economic growth. Featuring affordable housing, it will also serve as a center for tourism, exhibitions, and logistics.
Dubai is expected to deliver 38,174 new homes this year, according to ValuStrat’s latest report.
As of mid-2024, 6,939 apartments and 2,145 villas were completed, representing 20% of the year’s forecast, the consultancy reported in July.
Around 91,718 apartments and 28,385 villas are under construction, with handovers expected by 2028. Of these, 10% are in Jumeirah Village Circle, another 10% in Business Bay, and 5% in Jumeirah Lakes Towers, according to ValuStrat data.
The influx of expats looking for budget-friendly homes has significantly increased demand in the affordable housing segment, said Luke Remington, managing director of haus & haus real estate. Investors are also recognizing the potential for steady returns from affordable housing, especially in popular areas like JVC and Arjan, where rental demand is high.
However, developers are facing rising construction costs and must focus on enhancing quality to meet the expectations of today’s buyers and remain competitive, he added.
