The staff accommodation market in Dubai, UAE, is poised to register solid growth as more than 65,000 units will be required over the next three years to accommodate the increasing population of labourers, said a report.

This market has recorded significant increase in demand as construction activity across the emirate soars, stated international property agency Chestertons.

The construction sector has been the main demand driver for labour accommodation in Dubai, it is estimated that more than 14,000 buildings are currently under construction in the emirate.

 As a result, there is increased demand for staff accommodation as investors are closely following this trend and are developing more projects to cater to this soaring demand, it stated.

Chestertons said more than 65,000 units will be required over the next three years to accommodate the increasing population of labourers in Dubai.

Due to this increase in demand, average rental rates for labor camps have seen significant appreciation over the past few years.  Average rental rates per labour camp bed have also doubled from about Dh200 ($54) per person per month in 2009 to Dh450 ($122) per person per month in 2014.

Simon Gray, the managing director, Chestertons Mena said: "The staff accommodation segment has traditionally been ignored by mainstream developers; however, as the market matures and demand for luxury property wanes, staff accommodation could be the answer to generate sustainable long-term leasing income."

Continuous growth in manpower intensive sector such as hotel and retail has also led to shortage of executive staff accommodation at "affordable costs to the firms. Unceasing fluctuations in rents have forced most manpower intensive companies to look for long-term housing contracts or owning the properties rather than paying house rent allowance," noted Gray.

According to him, the long-term contracts help companies to secure rents at lower than market rate and improve predictability of cash flows.

"Mobilization is another key benefit of keeping staff around one place rather than different areas of the city. As a result, existing executive accommodation properties in Dubai have recorded high occupancy rates," he noted.

Amid tight supply, stated Gray, many companies might find it difficult to secure housing for their staff.

"With bullish growth prospects the demand for staff accommodation in Dubai is set to increase significantly. Companies are also looking at other emirates such as Sharjah and Ajman to relocate employees as increasing accommodation expenses, are hurting low margin businesses such as facilities management companies," he added.

Dubai currently has 90,000 hotel rooms, and expects to add another 20,000 rooms by 2016. As per government estimates, nearly 20 per cent of the population is employed in retail and hospitality sectors.

“Unit mix typically consists of studio and 1 bedroom apartments and includes up to 2-4 persons per apartment. Buyers of staff accommodation typically include companies from hospitality, retail and facilities management sector," remarked Robin Teh, the country manager and director (Valuations and Advisory) at Chestertons Mena.

"Most of the housing facilities for this segment are located in secondary areas such as Dubailand, Sports City and Dubai Silicon Oasis," he pointed out.

"Unlike other parts of the world there are very few companies providing staff accommodation services, therefore, many companies are investing into building staff housing for workers," stated Teh.

"For instance, facilities management companies have earmarked millions of dirhams to build housing complexes for their staff. This is a clear indication of future demand for executive accommodation," he added.-TradeArabia News Service