Special Report: Construction - State funding fuels regional activity
Gulf developers are slowly adjusting to the idea that the region needs more affordable homes. While there are still enough cash-rich buyers in the market to provide some demand for high-end developments, the cash-poor status of many developers means that building lower-cost houses, for which there is larger, proven demand, makes more business sense.
Saudi Arabia has the greatest demand for affordable housing, with the kingdom’s housing shortage expected to double by 2012 to 1 million units. But the lack of a mortgage law in the country is deterring private developers.
Instead, state-backed clients continue to dominate - a recent tender to provide 17,000 housing units for the National Guard is one such example.
In the UAE, Abu Dhabi developer Aldar Properties has now switched the strategy for its Al-Raha beach development, placing a far greater emphasis on low-cost housing aimed at the middle and lower-middle classes.
In Bahrain, the Diyar al-Muharraq project will also cater to a wider demographic, with affordable housing accounting for 20-25 per cent of the accommodation.
But while developers are responding to the new economic conditions, Manama, like Abu Dhabi and Riyadh, still has a long way to go if its supply is to match demand for this kind of housing.
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