Emaar plans to swap penthouses for affordable housing as the developer of the Burj Khalifa looks to capitalise on the need for 3.5 million affordable homes in the Middle East.
Known for its luxury master-planned developments, Emaar has launched a division to focus on building low-cost homes in the region.
The unit, Dawahi Developments, will operate as a separate entity with its own management and staff, Emaar said yesterday.
“The public sector alone cannot bridge the gap for value housing across the wider region,” said Mohammed Alabbar, the Emaar chairman.
But there are challenges to the business, analysts say. Land prices remain high in many countries and mortgages are unavailable to many potential buyers.
“There is definitely demand from people who need accommodations,” said Craig Plumb, the director of research for the property consultancy Jones Lang LaSalle.
“The challenge is to produce product that matches people’s ability to pay.”
Other large developers have entered the market, including Orascom in Egypt, with mixed results.
“The consensus is that no one has come up with a business model that works yet,” Mr Plumb said.
But delivering affordable housing constitutes one of the major opportunities for the property industry. Demand could quickly grow beyond the 3.5 million homes, according to Jones Lang LaSalle research, and is expected to increase faster than supply in the next five years. More info