The Rise of Affordable Housing in MENA: What It Means for Future Investors
The Middle East and North Africa (MENA) region is currently undergoing a major transformation in its real estate industry especially on the back of the high demand for affordable homes. Region has been traditionally associated with luxurious residential spaces and prestigious investment projects, however, it is currently shifting its concentration towards responding to the challenges of the mid- and affordable housing market. This shift is opening new possibilities for both local and global investors, the increasing need for affordable homes and the political leadership’s demand for equity in city development.
1. Demand of accessible Housing in the MENA Region
Essentially, the need for affordable housing has become more important in the MENA region due to increased urbanization, population as well as changes in economic status. The herein report by IQPC estimates that within the next decade, the number of people in the region’s urban area will increase to nearly 60%. The population growth therefore put a lot of pressure on the demand for cheap houses given the fact that the cost of living has continued to rise.
Quite a number of countries within the region such as Egypt, Saudi Arabia and United Arab Emirates among others have now incorporated affordable housing as strategic development plans. Governments are providing an incentive to developers to construct homes for lower and middle income earners segments of the population, while at the same time they are also investing in connecting infrastructure. The outcome is the increased number of affordable housing projects in the MENA region which creates a perfect prospect for investment in an otherwise unexplored market.
2. Shifting Real Estate Trends: Moving from the Luxury Segment to the Affordability Segment
In particular, earlier investment in real estate development in the MENA region has entailed only the construction of such projects that would attract only the well-off people and foreigners with interest in investing in those areas. Nevertheless, there is a tapping awareness of the necessity of housing in the region and it has slightly changed towards affordable housing. This change is in harmony with globalization that has been witnessed where cities are liberalizing to ensure that homes meet the requirements of as many groups of people as possible.
According to Fast Company Magazine, the Middle Eastern real estate remains an imperative dilemma to housing affordability. Governments have set policies that seek to establish ways through which more affordable houses can be provided to residents, developers are meanwhile seeking ways and means for the provision of houses for this market segment.
Thus, this transition creates new opportunities for investors. Many times inexpensive housing schemes are less risky and have less vulnerability than the luxury projects because the latter has a large market demand. Further, Subsidies, tax incentives, and loosened credit standards are executed by the governments of various countries in the region to attract Investments in affordable housing.
3. Government Policies and Investors’ Participation
Mr. Pan got ideas of getting government initiatives and investor support about launching the second brand of appliances in the market after experiencing these facilities in other companies.
In the following, it will be clear that authorities in the countries within the MENA region are actively involved in financing affordable housing development. Many countries have started implementing their national programs intending to solve the housing problem. For instance, Saudi Arabia’s Vision 2030 under the title of ‘Housing for All’ aimed at increasing options for low-income families, their target is to deliver affordable homes to 70% of the population.
Besides the government sponsored programs, there has been an emergence of Public Private Partnership (PPP) in funding and delivering affordable housing. These partnerships make it possible for private investors to work together with governments in the provision of large scale infrastructure projects and affordable housing targets without much risk. PPP for investors may act as an opportunity to be involved in most significant socially significant projects with access to state assistance (Faster Capital).
4. Affordable Housing as an Investment Opportunity in The MENA Region
This proposal shows that affordable housing is likely to have a myriad of strengths that explains why it can be a good investment. First the market in the MENA for affordable homes remains stagnant and drastically undersupplied, any property which has a good location and a reasonable price will have plenty of takers in the form of buyers and renters. These properties usually bring fairly good and consistent cash returns over the long term, where constraints of affordable housing are most severable in urban areas.
Second, affordable housing has low vacancies and high rental returns; this is very attractive to investors because of the steady cash flow. Also, these projects are quite affordable and so they are less sensitive to market conditions than the up market flashy projects which are largely funded by the wealthy elite.
Thus, as mentioned above, housing that focuses on affordability also helps to meet global sustainability objectives, according to Social Infra Ventures. For investors who are interested in this segment, they can harness impact investing, which aims at bringing both the social and the financial value of the investment. Within the emerging socially responsible investment category, affordable housing in MENA has become an even more lucrative investment opportunity due to the ever rising demand for ethical and sustainable investment.
5. Prospect and Prospects for the Next Investors
Nowadays the MENA has a great offer of opportunities in the sphere of affordable housing for investors who are going to enter this market. Some of the study’s important markets, including Egypt, Saudi Arabia, and the UAE, are homes to increasingly burgeoning populations, to which adequate housing is scarce. In these markets the investments in affordable housing can be highly rewarding yet socially responsible.
But there are also some issues which should be addressed. Some challenges that affect developers or investors include; availability of land, regulatory frameworks, and capital. It stands for investors to be more selective with market factors and to pursue common partnership as well as coordination with related authorities amid these issues.
Conclusion
A Path forward for Design that is Inclusive of all People
The emergence of affordable housing in MENA is creating new dynamics for the real estate market in the region for both local and foreign investors. The affordable housing sector targets a huge market, and as policy makers, developers and investors come up with strategies to produce affordable homes, the market for such homes is expected to expand significantly.
The attractiveness of investing in affordable housing to the investor is that it is a stable segment associated with the growing demand and is in sync with the other sustainable development goals. The MENA region is facing increasing changes and for people who would attend on the affordable housing investment they are not only earning a lot of money but at the same time, they are creating a solution to one of the most critical issues affecting the region, on the availability of affordable housing.
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