Some of the freehold properties in Dubai - such as Liwan, IMPZ, Dubai South - have not able to generate much interest among the mid-income groups due to several key reasons such as the high rents, lack of infrastructure and access to metro, said a report.

A spatial analysis of Dubai reveals that a higher concentration of residents is living in leasehold areas compared to freehold, according to Reidin.com, a leading online information services provider.

The density differential between both segments of the market can be attributed towards the multitude of options that exist in the mid-income housing space for each.

Besides the quantifiable difference in rents between freehold and leasehold areas, there is a plethora of factors that influence a person's choice of location (i.e. access to metro, proximity to school), stated the report.

Affordable leasehold areas have superior infrastructure compared to the underdeveloped freehold communities (i.e. Liwan, IMPZ, Dubai South). Until these communities rollout their infrastructure, they will be less conducive to cater to end-user, the report pointed out.

The leasehold segment has a wider range of affordable housing options, whereas freehold still predominantly caters to the affluent class, said the Reidin.com report.

The rent-to-income ratio across developed countries such as the US and UK is anywhere between 30 and 47 per cent. Within these parameters, the median salaried worker of Dubai earning Dh15,000 ($4,082) has a budget of Dh54,000 to 90,000 ($14,698 to $24,497).

"These budget constraints restrict residents from moving to freehold communities due to a lack of options in the affordable segment. This shortage only widens as residents look for larger size units," said experts.

A granular look into the price points within the affordable segment reveals that the median salaried worker will only be able to afford to buy studios and one-bedrooms, whereas in a renting dynamic the threshold is up to two-bedroom, said the report.
 
In other markets, this is not classified as "affordable" since the first time buyers in mid-income segment typically cluster into the two-bedroom space globally, it added.-TradeArabia News Service