Dubai's Deyaar Development will fund 30 per cent of its $817 million Midtown project through bank loans, the real estate firm's chief executive said on Monday.

Midtown will target mid-income residents as Deyaar tries to fill a gap in the market for more affordable housing.

Rising living costs in Dubai have put a squeeze on many residents' disposable income, with house prices up by more than half since the start of 2013 and rents rising accordingly.

Deyaar, the emirate's third-largest listed developer by market value, will own half the project's 2,500 units and lease them to tenants, stated chief executive Saeed Al Qatami.

He was speaking after unveiling the scheme's first phase, which will consist of 659 apartments of up to three bedrooms.

Dubai developers have increasingly sought to retain some properties within their developments because lettings provide a stable, predictable cash flow that helps offset potential volatility in the sales market.

Midtown's first phase will be completed by September 2018, while Deyaar expects 90 per cent of the overall project to be completed by the end of 2020.

The developer, 41-percent-owned by Dubai Islamic Bank according to Reuters data, will fund 30 percent of the project through sharia-compliant bank loans, Qatami said.

The total cost will be up to 3 billion dirhams ($817 million), he said, adding that this included land already acquired for the project.

Deyaar will sign construction contracts within about two months, Qatami said, predicting work would begin by the end of the year.

The company last month reported a 37 per cent rise in second-quarter profit that was mostly due to it writing back some previous provisions.-Reuters