Saturday, September 01, 2007

High land-prices considered a hindrance for low-budget housing

The property developers in Dubai have said that unless the government facilitates cheap land, the private developers will not go ahead with construction of low-budget housing.

The Chairman of New Dubai Properties, Ahmad Al Abdullah, says that the skyrocketing land prices imply that developers are in the process of constructing commercial blocks, hotels or luxurious residential projects that yield high returns on their investment, rather than the low or middle range units.

With such an escalation in land and house prices, the ability to purchase a plot or land among individuals of various income groups gets affected and in the process the ability of the emirate to draw attention from the talent required for further development is also shattered.

Al Abdullah said "We will build affordable housing if the government provides us land at an affordable price, and directs us not to raise rent above a fixed level. For instance, Dh.40,000 to Dh.50,000 for a two bedroom apartment. In case the plot is high in value, we will only construct a project that can cover the initial amount invested by us."

Al Abdullah mentioned that 40 percent of the project value makes up the price of the land, while the rest comprises the construction cost, which has also shot up considerably.

He added that with the unavailability of cheap land in Dubai, the private developers have no option but to consider other emirates including Ajman, where the land is much cheaper.

No comments: