Details

-Jordan, Egypt & Lebanon need affordable housing

Real estate projects targeting low and middle-income segments have formed the basis for state-run plans and strategies to rebalance the property market and stimulate demand for private sector-led developments over the past period, during which the Middle East region witnessed, and still, uncertainties in terms of supply and demand and price volatility.

In spite of the need for projects addressing target segments, the demand for low-priced and low-quality units is ebbing.

However, such projects will positively reflect on domestic demand and the pace of operation of all relevant sectors in addition to forging long-term solutions to existing social challenges, according to Al Mazaya Holding Real Estate Weekly Report.

The pace and nature of the current pressures faced by the Middle East region and the entire world have become the main determinant of the introduction of low & middle-income projects, said the report, adding that such a situation risks posing new challenges amid continuing population growth and its concomitant increased levels of poverty and unemployment.

The affected countries seek to provide adequate and affordable housing solutions, primarily aimed at addressing the consequences of population growth as well as plans to reduce the gap between supply and demand for this category of real estate products.

This comes at a time when population growth is the main driver of demand for low-cost housing units, especially for young people interested in finding affordable housing commensurate with their income. Current data indicate that the GCC region’s population will reach 53 million by 2020, a fact which will raise demand for low-cost housing units.

Al Mazaya pointed out that the identification of target segments has become growingly difficult with the continuing decline in prices of all types of residential units, except for luxury ones. Low prices, according to the report, have contributed to reducing demand for low-cost housing units and enabled low-to-mid income segments to get units of higher quality at lower prices.

It is worth mentioning here that the launch and completion of projects targeting low-income segments are still bound to  government trends and plans. The region’s markets are making more achievements on this level every day, according to the report. The housing policy in the UAE, for example, aims to provide incentives to low-income citizens in order to meet their citizens’ housing needs. The government also seeks to address other segments of end-users in order to reduce the gap between various segments of the UAE society.

Saudi Arabia plans to build 1 million housing units within the framework of Saudi Vision 2030. The Sultanate of Oman has allocated more than OMR 90 million for housing projects. The Kingdom of Bahrain is likewise investing extensively in social housing schemes and managed to provide more than 36,000 housing units for its citizens, including apartments via easy housing loans, residential plots and subsidised rented flats.

The need is growing, and the gap is widening in the markets outside the GCC region to offer more projects to low and middle-income people, especially in Jordan, Egypt and Lebanon.

Al Mazaya cites the Saudi model in recent years as a good example for addressing the challenges faced by the housing market, and for providing solutions to meet the needs of target segments.

The Saudi Ministry of Housing provides several options for citizens of different needs and segments, as part of a plan to boost homeownership among Saudi citizens to 70% by 2030. The report in this regard highlighted the Saudi “Sakani” Program, which has provided 280,000 units in 2017 and 300,000 units in 2018. Since its launch, the programme has been receiving hundreds of thousands of residential real estate applications by Saudi citizens and handling them on an urgent basis. State-sponsored financing plans are likewise underway and making good strides. The decline in market prices by up to 11% on apartments and 12% on villas in KSA has contributed to reducing pressures on the housing sector and has enabled new segments to get suitable and high-quality real estate units.

In spite of the tangible achievements being made in the region as a whole in this respect, public-private partnerships need to be further developed. PPP-carried out projects should be given the same incentives and advantages provided to real estate projects being offered by private developers, including credit facilities, and mortgage plans through which the banking sector can be encouraged to provide more homeownership loans.