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Dubai lacks enough affordable housing options.

Housing: Other emirates act as satellite cities to Dubai

DUBAI, August 7, 2016

The limited stock of affordable options in Dubai has caused for the neighbouring emirates to act like satellite cities with around 1.1 million people who work in Dubai residing in another emirate (30 per cent of the active population), as they try to take advantage of the cheaper rates, according to a report.

Rates in other emirates such as Sharjah, Ras Al Khaimah, and Ajman are 30-40 per cent cheaper than the affordable options of Dubai, with accessibility to larger size units, said the report by, a leading real estate information company focusing on emerging markets.

A time series analysis of workers of Dubai who reside outside increased by 185 per cent (13 per cent to 37 per cent) from 2005 to 2009, coinciding with the tripling of rental rates alongside the limited affordable housing options in the freehold space.

However, after the global financial crisis, rental rates plunged causing the transient population to move back to Dubai. From 2009 to 2015, the percentage of workers living outside Dubai decreased by 16 per cent despite the increase in rental rates in 2012.

During this period more affordable options in the freehold space became available in the form of DSO, Sports City, and Discovery Gardens, offsetting the hike of city-wide rents.

A break-down of the structure of Dubai’s freehold supply, in relation to rental rates in monitored areas, reveals that only 36 per cent is below the Dh70,000 annual rental mark. Within that segment, the majority is skewed towards studios and one-bedrooms, making it not
family friendly.

"Developers will have to shift course, by offering larger dwellings at reasonable rates in order to attract families. It has
been this supply pipeline that has led to the growth of satellite cities around Dubai. This has been a trend that has been witnessed in
major metropolitan cities throughout the world," the report said.

As Dubai continues to push the job engine by deploying a fiscal stimulus in the economy, the population continues to ratchet higher despite the recent restructuring of certain sectors.

A dissection of Dubai’s employees' pay scale reveals that salaries have been pushed upwards in the last four years. From 2012 to 2015, workers earning above Dh10,000 per month almost doubled increasing from 12 per cent to 20 per cent.

Construction, manufacturing, retail and whole sale, along with public administration employees the most number of workers above the Dh20,000 level. These sector will be benefit from the fiscal stimulus under way, increasing the purchasing power of people in the future, it said. - TradeArabia News Service

Tags: Dubai | emirate | affordable housing |

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