Homes The UAE is known more for its luxury high-rises than its family homes, but there is a push for affordable mid-sized housing.
Middle class housing is needed but the market has been slow to grow
In order to be satisfied, according to Machiavelli, man needs only his house and his honour. In the UAE, however, it would be more of case of happiness requiring honour and a high-rise flat, as villas and town houses are a relatively scarce commodity. The preponderance of apartment blocks doesn't just mean that most of us live high-rise lives, it also means that this type of house-style accommodation - properties with stairs, enough space for children to play and for parents to escape when their sanity is in doubt - is very expensive.
"Up until now, developers' focus has been on single professionals," says the property investment consultant Shehzad Naqvi. "Flats are far more prominent than villas in Dubai, Abu Dhabi and many of the other emirates. As a consequence, demand for villas is so high that prices are now crazy. We are seeing average three-bed town houses in Dubai starting at around Dh2 million." And who wants average? For more desirable and luxurious villas, the price rockets: villas on the Palm Jumeirah are currently selling for Dh30 million. One of the reasons such an imbalance has occurred is that developers can generally make more money out of apartments than villas.
"Developers favour buying a small plot of land and building sky-high, as it is more profitable," says Alex Upson of Cluttons estate agency, which sells in the Middle East. "For this reason, family housing has been in the minority - and whether this is going to change remains to be seen. "We see large villas for high-income earners, but we haven't got that many villas catering for people who earn medium incomes. For Dubai, it's a planning issue and may mean in the future that families will have to go to other emirates to find the homes they need, and commute. At the moment, it can be difficult for families to settle into life in the UAE. We've seen evidence of people with jobs lined up and who need to start, but they can't bring their families, as they don't have the housing or the schooling in place. Some people are even leaving their families behind in the UK until these issues can be resolved."
The developer DAMAC's latest project in Abu Dhabi, Oceanscape on Reem Island - a curved, ultra-modern, 29-floor building with infinity pools, overlooking the mangroves and the sea - is a good example of what is happening. A total of 201 units are currently being sold on the site in northeast Abu Dhabi, just 20 minutes from the airport - and only eight of them are town houses. The other 193 units are apartments. Prices for a three-bedroom town house start at Dh4.74 million.
So far, property developments in the more emerging emirates - including Ras al Khaimah, Ajman and Umm al Qaiwain - appear to be targeting investors, who tend to favour apartments. "We're still not seeing villas built in Ras al Khaimah," says Cluttons' Upson. "Developers there still seem to be focusing on investor demand and not on end users. Abu Dhabi, which has an older profile of buyers, rather than young singles, needs to develop more family units soon. Aldar, one of the largest developers doing a lot of the big, master-planned projects, seems to be starting to think about building for a larger section of end users."
Similarly, Dubai has villas and town houses in the pipeline - due to be built in the next two years - but for the moment families are having to be patient. "We're in a maturing economy," says Gregg Downer, Nakheel's Dubai-based general manager of development for its Al Furjan development. "I suspect earlier on it was more young professionals who were after property in Dubai; now there is a strong economy to attract families. Nakheel, and to some extent Emaar, are addressing this need, but it is a catch-up process. All Nakheel projects are very much focused on the community aspects. We are selling 4,000 units at Al Furjan, south of the Palm Jumeirah, for example, and half of these are villas and town houses. Here, three-bed town houses start at Dh2.3 million and villas at Dh 3.5 million. The development will consist of four villages, each with its own centre, and walking and cycle paths to connect the villages. There will be two schools - one with 1,700 places - medial facilities and gyms.
"We did look at the market needs and saw the gaps. We recognised that the need for three-bed terraced homes wasn't being serviced as well as it could, or the six-bed villas. The smaller and larger family homes weren't being provided for." Downer acknowledges that the market is currently restrictive for families, but he believes customers in Dubai are willing to wait. The end of this year until 2012 will see a good supply of family homes being built, he promises. On the question of affordability, he says that while Dh2.3 million for a town house is a lot of money, the overall cost of living in Dubai is less and so families generally have more expendable income.
"I get a sense that people are spending more of their monthly salaries on their property here - and that they can afford to because of the low cost of living. The capital growth here has bedazzled the critics, so people see that by putting their money into their property they are making a sound investment both in terms of shelter, lifestyle and money. People are very focused on purchasing here."