In Dubai, United Arab Emirates (UAE), nearly 90 percent of the population are expatriates, while in Cairo, 95 percent are locals. Yet the workforces of both cities are dealing with the same issue: a critical lack of affordable housing for middle-income employees.
“The reason for that,” said Craig Plumb, head of research at JLL MENA in Dubai, “boils down to the fact that developers can make more money developing luxury products. While the cities are very different, the issue is very much the same. There’s too much high-end product being sold and not enough [that is] affordable.”
Obstacle to Attracting Workers
Even though the prices of some luxury properties in Dubai have fallen due to market forces, including a drop in the price of oil, housing prices still have not come down to a level that is considered affordable. “In Dubai, we estimate that only 15 percent of all the product that’s being built today is classified as affordable,” Plumb said.
The housing shortage “is very much affecting the ability of companies to do business here and attract people,” he continued. Many recruited individuals “say they can’t afford to live in Dubai because residential pricing is so high.”
One thing the UAE government has done to alleviate the situation is build infrastructure connecting the outskirts of the city to the center, with plans for a new metro rail line in the future. “In this way,” said Maysa Sabah, an urban planner in Dubai, “it is incentivizing developers by finding and preparing land for them to build on, because it’s cheaper to build on the periphery.”
Housing Challenges in Cairo
The Egyptian government is investing heavily in building new settlements just outside of Cairo. However, the construction only creates an illusion of solving the housing problem.
“This is a sort of paradox. The government’s national program to get people out of the crowded city and the crowded valley and into these new development areas … doesn’t work,” said David Sims, an economist and urban planner based in Cairo.
Unlike in the suburbs of Dubai, housing in Cairo’s outskirts can be costly. “The cost of bringing your family into a new area where you don’t know anybody and the prices are much higher is just too much,” he said.
Cairo remains expensive for locals, as well. According to the Built Environment Deprivation Indicator (BEDI), the median rents and house prices in Cairo are beyond the means of 41 percent to 67 percent of households in the area. “Egypt’s going through a difficult period because of the devaluation [of the Egyptian pound], and that has meant almost a 100 percent increase in a lot of basic goods, whereas salaries are hardly increasing at all,” Sims said.
Egyptians often resort to illegally built housing, and they often need to rely on their families for housing assistance. “What [often] happens … is the father builds another floor, or at least a room, which allows the [son] to get married, so his housing problem is, in theory, solved,” Sims said.
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Facing the Problem
Although the situation in both cities is complicated, it is not unsolvable.
In Cairo, BEDI recommendations include changes in policy and legislation that regulate the housing market and adding a subsidized housing program.
In the UAE, the government is aware of the housing problem, but the few attempts at solutions don’t yet have teeth. “The Abu Dhabi government introduced an inclusionary housing policy a few years ago,” Sabah said. “It required every development to have a percentage of housing that is affordable.”
However, it’s unclear whether that policy was enforced. “We don’t know how many developers met the requirements nor how many or type of [affordable] housing units were delivered,” Sabah noted.
“There are a number of solutions,” Plumb said. “One of the things that we think they [government officials] should do, if the government will tackle this issue seriously: They should allocate land, either for free or subsidized parcels, for the development of affordable housing. The main conclusion is that the market won’t solve this problem without direct involvement of the government.”
Katie Nadworny is a freelance writer in Istanbul.