Friendlier prices change Dubai's leasing landscape

The actor William Baldwin once remarked: "A strong economy causes an increase in the demand for housing; the increased demand for housing drives real estate prices and rentals through the roof. And then affordable housing becomes completely inaccessible." How true, especially in the context of Dubai. Prices rose dramatically from 2006 and peaked in early 2008, when renting or buying in Dubai became out of reach for almost all income groups. Mid-income professionals, single-income households, core workers like nurses, salespersons and administrative staff and low-income groups suffered. Families moved to Sharjah and Ajman, preferring the daily commute to paying the ridiculously high rents; bachelors shifted to sharing accommodations, many of which were health and safety hazards; and owning property became a distant dream for even the upper classes. However, with the recession the situation changed significantly. Rents and sale prices dropped substantially, making living in Dubai extremely affordable. But affordability is a relative term, and understanding the relationship of income to rents and sale prices is essential to truly understand how affordable Dubai is. Our research team has made its own estimates as follows based on anecdotal information gathered from industry experts: n With over 80 per cent of the population comprising expatriates and given the difficulties and uncertainties involved in obtaining property-linked visas, Dubai is primarily a leasing market. The rental affordability threshold is assumed at the international benchmark of 30 per cent of income. Also, for the purpose of the analysis, properties in middle- to low-income locations such as International City, Al Ghusais and Discovery Gardens have been considered.From / Gulf News