UAE-based sustainable property developer, ZāZEN Properties explained that it is important to ramp up efforts of sustainable construction to future-proof the economy and accommodate the growing population.
This is particularly true for the mid-market segment, as the total number of units delivered this year stands at 50,000, which is half of the population increase recorded in Dubai.
The construction sector
However, the total number of units that are scheduled for delivery in 2024 stand at just 24,000, even though there are ongoing public housing and building programs.
In addition, the UAE has also allocated funds of about $356 billion to private real estate developments. 2023 also saw contract awards of $17 billion.
This is higher than the full-year total that was recorded in 2022. In 2023, the construction sector in the UAE recorded growth of 3.3%.
In 2024, it is expected to experience growth of 4%. Founding member and COO of ZāZEN Properties, Madhav Dhar said that these construction figures were not just applicable to housing.
They were also applicable to the energy and transportation sectors. The population of Dubai has already exceeded 3.65 million and almost halfway to its goal of 8 million by 2040.
He added that the real estate developers in Dubai have to ramp up their housing construction sustainably for complementing their energy and transportation and support both current and new residents.
2040 Urban Masterplan
Madhav was referring to the Dubai 2040 Urban Masterplan under which the population of the emirate needs to reach 7.8 million in a period of 16 years.
Some of the other prominent objectives of the plan include doubling leisure and green areas, planning healthy and vibrant communities that offer a range of core and housing facilities, along with enhancing economic land.
While the city is on course to achieve these goals, extra focus is required for mid-market segment as investors, residents and end users are looking for high-quality and affordable apartments.
Of all property transactions in Dubai, 25% of them come from mortgages, but the market is expected to be robust in terms of transactional activity in the first half of this year.
This is applicable in terms of rental increases and price appreciation. In 2022, a record-breaking number of 16,700 mortgage transactions were performed.
The alternative lending market reached $240.9 million in 2022, but it experienced a 39.9% growth in the market in the UAE in 2023, as it rose to $337 million.
The increasing property prices were the reason behind this rising demand for mortgages. According to Madhav, the mid-market segment would play a key role in bolstering the UAE real estate market.
This is particularly necessary for the emirate to be able to achieve the Dubai 2040 Urban Masterplan. The next 12 months would see a number of new off-plan developments approach the handover stage.
This means that prospective buyers would be able to take advantage of a wide array of choices at their disposal.
But, the mid-market residential developments would have to rise to ensure cost-friendly projects are available to prospective buyers.