Affordable housing from a property developer’s viewpoint
It is now widely recognised that the pressing needs of the affordable housing market in the MENA region can only be addressed effectively through closer cooperation between the public and private sectors. This will entail balancing the political and socio-economic concerns of governments with the commercial considerations of property development companies.
Given that developers are under an obligation to deliver realistic returns to their shareholders over an acceptable investment tenor, the solution – from a property developer’s viewpoint – must lie in the provision of greater government incentives to enable developers to meet these targets. For example, governments need to consider how they can help reduce the time for development by cutting red tape and bureaucratic delays in areas such as planning approval and building permits. They also need to facilitate the smooth transfer of new technologies from abroad, which in turn will allow property developers to reduce time by incorporating fast-track methodologies such as modular, pre-fabrication and design-and- build processes into the development cycle. Regionally, governments can also reduce development time by finally agreeing upon a long-awaited unified building code for the GCC.
Allied to which, the affordable housing market is characterised by the need to deliver low-cost units for target occupiers. Governments can easily incentivise the market to meet this requirement by providing free land, reducing or abolishing import duties, and encouraging local companies, especially SMEs, to manufacture building components in the region.
More also needs to be done by governments to enable target occupiers to afford home ownership, through new initiatives such as low-cost mortgages, housing grants, and shared ownership through housing trusts or mutual societies. There is also a need for education about the realities and benefits of the ‘housing ladder’, which is a concept not understood in the region.
By addressing these issues in a determined and timely manner, governments will enable developers to play a commercially- viable and constructive role in jointly developing a vibrant and effective affordable housing market in the MENA region.
