Due to rising rental prices in Dubai central areas like Downtown Dubai, Dubai Marina and Business Bay, and also because of the slashed overall remuneration and housing allowances by large foreign companies, many middle-income tenants are forced to seek rental options on the outskirts of the city or in the neighboring emirate of Sharjah, said Cluttons in its latest report.
Those Dubai residents, whose income is between USD 2,500 and USD 9,000 per month, can afford renting a home for USD 19,600 per year, or buy a property at a price of USD 215,000. Of course, this is only a small part of the property cost in the central areas. For example, Dubai Marina and Dubai Downtown two bedroom apartments cost an average of USD 1 million.
Property prices, and rents have somewhat stabilized in the past year but are still 50 per cent higher than in 2013, according to Cluttons, and are expected to increase again by 2017 as Dubai prepares to host the Expo 2020. That’s why those tenants, who used to live, say, in Business Bay only a 10 or so minutes drive from the city center, had to move to Dubai suburbs, such as Remraam, 30 minutes and more drive away from the center.
“There’s a squeeze on middle–income earners,” said Faisal Durrani, head of research at property consultancy Cluttons. And so, “Affordability issues are likely to become more acute.”
Among the most popular Dubai areas with affordable housing and rents there are International City, Dubai Outsource Zone and other run–down areas near Dubai’s creek. Sharjah is also still popular, for rentals there are still less than half those in Dubai.
“The need for affordable housing will become more pronounced,” said Dana Salbak, JLL research manager. “Employers will have to increase wages or housing allowances to attract and retain staff.”