Affordable housing is an extremely relevant issue to the GCC countries as there is a huge mismatch between demand and supply, said an expert.

R Lakshmanan, chief executive officer of Bahrain-based Sakana Holistic Housing Solutions, a leading Islamic mortgage finance provider, was speaking at the recently concluded Middle East Affordable Housing Development Summit in Bahrain.

In his presentation focused on “Affordable housing and finance in the GCC context”, he said that approximately 65 per cent of Bahraini nationals, 50 per cent of Saudi nationals earn less than $2,000 per month.

Using the commonly accepted definition of affordable housing cost at 30 per cent of monthly income, this segment of the population is currently unable to afford a house with two bedrooms, Lakshmanan pointed out.

The GCC governments have so far been providing housing to nationals through free land or house or subsidized financing cost, he said.

As the population grows it is an increasing burden on the Government to provide housing for nationals and the wait list in some of the GCC is more than 10 years.

Further, the buying preference among GCC nationals is to own a villa with couple of bedrooms instead of an apartment. This poses a challenge to the Governments to provide housing to its nationals, as cost of villa is higher and customer monthly income level is not sufficient to afford mortgage or rental payments, he said.

With huge reliance on oil revenues, any downward pressure on oil prices will also have an impact on provision of housing.

“Expatriates comprises of 25 per cent - 60 per cent of the total population in GCC countries with majority in the low to middle income sector. GCC governments must include expatriate population as part of national housing strategy,” Lakshmanan said.

He explained that one-third to half of GCC population is less than 25 years of age and growing thereby providing sustainable demand for housing.

Lakshmanan said that Bahrain has taken a lead in announcing public-private partnership to build 5,000 homes in the first stage and this approach must be adopted by GCC countries to solve the housing problem.

He added that changes in legal and regulatory framework will be required to strengthen housing and mortgage sectors and noted that Abu Dhabi Urban Planning Council has taken a lead in including affordable housing as part of the newer housing developments. – TradeArabia News Service