MAG joins Dubai's scramble for affordable homes

In keeping with Dubai's ongoing focus on providing affordable housing options to its mid-income residents, the city-based real estate developer MAG has announced a project of over 1,000 residential units in the Dubai World Central area near the Al Maktoum International Airport.

Christened MAG 5 Boulevard, the project is a joint venture with MBM Holding and will include Studio apartments priced from AED 449,000 ($ 122,238) and 2 BHK apartments with a price tag of AED 799,000 onwards.

Construction of the AED 700mn project is expected to commence from the fourth quarter of this year (2015), while the completion is scheduled for sometime in 2018.

According to industry experts the pricing for the project has been kept mid-market by Dubai standard which has witnessed an increase in property prices in recent years. As per realty advisory firm JLL, the rentals for apartments in Dubai increased by approx 18 percent in the fourth quarter of last year.

A recent study conducted by Colliers International has revealed that half of Dubai's workforce earns monthly wages in the range of AED 9,000 - 15,000. In keeping with the principle that housing costs should not exceed 30 percent of monthly income, Dubai workers should pay between AED 35,200 - 54,000 for housing each year. However options in this range are few and far between, with the exception of International City, Silicon Oasis, Discovery Gardens, and Deira.

Taking the cue, other Dubai-based developers are also joining the affordable housing bandwagon with majors like Damac Properties stating its intention to add in excess of 35,000 residential units and hotel apartments over the next five years, including at its Akoya project. Emaar's Mira project also includes units at mid-market prices of less than AED 1mn.

Sharing his opinion on this trend Craig Plumb, regional head (research), JLL feels that Dubai developers have now sensed a new opportunity in the city's burgeoning market for affordable homes. Says Plumb, "A number of people have been sharing accommodation or living in cheaper places like Sharjah simply because of the lack of affordable rental or housing options in Dubai. Given the shortage of affordable units, developers have realised it's an untapped market."