One of the major challenges faced by this salary class is the difficulty in obtaining bank financing to finance their properties.
Dubai’s property market is short on offerings for lower middle-income expats with salaries between Dh4,000 to Dh8,000, and most of them are new entrants to the emirate’s job market, say developers.
Speaking at a recent webinar, they said one of the major challenges faced by this salary class is the difficulty in obtaining bank financing to finance their properties.
“If we look at the pyramid, right at the bottom are blue-collar workers. Their housing is standardised and their employers take care of that. The next segment that really needs good quality housing is the lower middle-income group with a salary of Dh4,000 to Dh8,000,” said Sailesh Israni, managing director of Sun and Sand Developers.
“These are the people who first come to Dubai as young engineers, clerks, draftsmen, etc. These are the people who are starting out first. For them, there is nothing developers can cater to as of now because of the bank financing challenge.
“The second bracket is where bank financing can be made available to income groups starting from Dh10,000 to Dh20,000, which is actually the middle class and not the upper middle class. They would be able to afford a home from Dh500,000 onwards and have access to bank finance and are also in a position to pay the initial deposit. Finally, the class that everyone has been catering to are people with income above Dh20,000 or Dh25,000,” Israni said.
For the first bracket of the Dh4,000-Dh8,000 salaried class, this is where an investor should buy the property and rent it out to that group and can earn good return on this investment, he added.
“I don’t sell all my assets and retain 30 per cent. My property management firm takes over to rent the assets. I am getting a net of six per cent plus for sure – even in this market,” Israni said.
Maysa Sabah, senior associate for urban planning at Aecom Middle East, said Dubai developers were more focused on the luxury or high-end sector as margins were higher for years.
“Over the past few years, we have seen a shift and more interest in affordable housing. Prices and rents have dropped 25 to 30 per cent since 2016 due to a combination of factors,” she said.
“Because of all these dynamics, we have seen developers shift more towards affordable housing. We are talking about developers targeting earnings between Dh15,000 to Dh30,000. Developers have been building smaller units, using standardisation and offering attractive payment plans,” she added.
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