With its young and fast-growing population. GCC countries in need of affordable housing, are encouraging the private and public sectors to work together to address this affordable housing demand across the region. Governments need to find a way to convince developers that they can go in the business of building affordable houses when they often fear that there is no land for affordable housing, that affordable housing is economically unfeasible or that buying houses is too risky for low-income households. A way to do it might be to secure land, mostly from governments, that are often big land owners.

Turkey and Morocco are already exploring those possibilities, having the public sector working with the private sector on such projects. In the GCC, Bahrain has recently signed a $551.7mn public-private partnership (PPP) agreement with real estate and infrastructure development company in order to build more than 4,000 affordable homes. It is the first privately-financed affordable housing development in the region. But like in most real-estate projects, the correct location is crucial. Even if land is available, if the surrounding infrastructure is lacking, the project will be a failure. Lands need to be indeed far enough not to be so expensive, and close enough to areas of job creation.

And for developers to be encouraged to participate in the sector, governments need something to counter balance the economic downfall of developing affordable housing. Providing lands is an essential step, buying units and providing tenants prior to development could be another one. The increasing populations mean investors should also consider affordable home communities a safe and lucrative bet.

And different countries’ views on what constitutes affordable housing must be taken into consideration. For example, in the UAE, housing is provided to the lowest-income workers, so the affordable section of the market is already taken up by the employers. And the government subsidises homes for nationals meaning there is little demand from Emiratis, but this is not the case in other countries in the region. In Bahrain, Saudi and Oman, affordable housing is not for expatriates but indigenous population (young people with very large families). For instance, Saudi Arabia will need up to 1.3mn new homes by 2020 and is already pledging $270bn to a programme to deliver more than 110,000 land plots by the end of 2015.


Mehdi Lazar, Ph.D.

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