Dubai housing squeeze pushes middle-income expats out to the suburbs
By Matt Smith
DUBAI (Reuters) - While Dubai continues to pump out sumptuous new apartment blocks, for a rising number of expatriates the city no longer offers the luxury lifestyle that lured many foreigners to the Gulf.
A shortage of affordable homes and a reduction in overseas allowances since the financial crisis are pushing foreign staff on middle incomes out to less glamorous areas of the city far from the office, or to neighboring Sharjah.
Investment bankers, lawyers and top managers at multinationals may enjoy seven-figure salaries but other expats - from architects, accountants and IT managers to legal secretaries and HR executives - are often on household incomes of 10,000-30,000 UAE dirhams ($2,720-$8,170) a month, says property consultants JLL.
They can afford annual rents of 72,000 dirhams ($19,600), says JLL, or could buy a property for around 790,000 dirhams - a fraction of prices in expatriate neighborhoods Dubai Marina and Dubai Downtown, for example, where two-bedroom apartments sell for up to 4 million dirhams.
"There's a squeeze on middle-income earners," said Faisal Durrani, head of research at property consultancy Cluttons.
"Affordability issues are likely to become more acute."
The emirate's real estate sector has been among the most volatile globally over the past decade as it turned from boom to bust to boom again. Property prices, and rents, have steadied in the past year but are still 50 percent higher than two years ago, according to estate agent Cluttons, and are expected to be on the rise again by 2017 as Dubai prepares to host the EXPO 2020.
The only districts offering affordable accommodation for many middle-income earners are run-down areas near Dubai's creek and parts of the city's outskirts, such as International City and Dubai Outsource Zone. Continued...