Dubai Real Estate Developers Need Cheap Land for Low-Cost Housing
Private real estate developers in Dubai require the government to facilitate the availability of cheap land. For the much needed low-cost residential units in the Dubai real estate market, inexpensive land is an inevitable prerequisite. At present, soaring land prices in Dubai translate into real estate builders in the emirate coming up with residential, commercial and hotel projects that offer good return on investment, instead of providing mid- and low-budget real estate options. According to real estate experts, the rising inflation rates in Dubai and the eroding purchasing power of residents need to be checked at the earliest in order to maintain the popularity of Dubai on the world real estate matrix.
In this wake, the setting up of the Real Estate Regulatory Agency in Dubai has been phenomenal. The body is working on a comprehensive Real Estate Index in order to gauge Dubai market scene and propose ways to the government for regulating the present situation. In the meantime, the Dubai Urban Development Framework – a programme that will direct the urban development of Dubai until 2020 – will also attend to the emirate’s decline in terms of real estate affordability of housing units in the past three years.
The price of land constitutes about 40 percent of the value of a real estate project. The remaining percentage is represented by real estate construction costs, which have also witnessed an upward trend in the last few years. At present, Dubai real estate dynamics are such that commercial buildings give more income to real estate developers in Dubai, as compared to residential projects. The shortage of cheap land in Dubai has pressurised private real estate builders into considering development of projects in other emirates where land rates are comparatively lower. On an average, land values saw a 35 percent increase last year, while this year the rise has been of about 24 percent.
The current high price tags on land mean that the end unit is available at a high price in the real estate market so that the initial investment can be covered. Majority of Dubai real estate developers feel the government can help the present state of affairs by –a. providing land at reasonable priceb. putting a limit to property rents in DubaiFor some time now, getting low-cost housing options has been a priority on Dubai government’s agenda.
At the least, it is hoped that the soaring land prices in Dubai and the consequent skyrocketing of Dubai real estate rates will be a thing of the past in near future!
In this wake, the setting up of the Real Estate Regulatory Agency in Dubai has been phenomenal. The body is working on a comprehensive Real Estate Index in order to gauge Dubai market scene and propose ways to the government for regulating the present situation. In the meantime, the Dubai Urban Development Framework – a programme that will direct the urban development of Dubai until 2020 – will also attend to the emirate’s decline in terms of real estate affordability of housing units in the past three years.
The price of land constitutes about 40 percent of the value of a real estate project. The remaining percentage is represented by real estate construction costs, which have also witnessed an upward trend in the last few years. At present, Dubai real estate dynamics are such that commercial buildings give more income to real estate developers in Dubai, as compared to residential projects. The shortage of cheap land in Dubai has pressurised private real estate builders into considering development of projects in other emirates where land rates are comparatively lower. On an average, land values saw a 35 percent increase last year, while this year the rise has been of about 24 percent.
The current high price tags on land mean that the end unit is available at a high price in the real estate market so that the initial investment can be covered. Majority of Dubai real estate developers feel the government can help the present state of affairs by –a. providing land at reasonable priceb. putting a limit to property rents in DubaiFor some time now, getting low-cost housing options has been a priority on Dubai government’s agenda.
At the least, it is hoped that the soaring land prices in Dubai and the consequent skyrocketing of Dubai real estate rates will be a thing of the past in near future!
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