(MENAFN- Gulf Times) Nakheel, the developer of Dubai's palm-shaped islands, is building thousands of lower-priced homes in the city to become less dependent on income from luxury accommodation, chief executive officer Sanjay Manchanda said.
Nakheel announced on Tuesday that the Jebel Ali Gardens project in south Dubai will provide 10,000 affordable apartments for rent, spread across 42 towers. The one-to three-bedroom properties will house about 40,000 people, the government-owned company said this week at the Cityscape Global conference. Nakheel declined to say how much the project will cost or how much tenants will pay to live there.
Having a presence in both the "luxury and the budget segments means you have a very stable business model, and this is what we are trying to achieve," Manchanda said in a September 8 interview.
Dubai's housing market, the most volatile in the Middle East, is slowing as cheaper oil and weaker currencies in Europe and Russia erode demand. Nshama, another Dubai developer, began offering lower-priced homes this year, including retailing 3-bedroom townhouses for less than 1mn dirhams ($270,000).
Home prices in the emirate dropped 12% in the 12 months through June, the biggest decline among 56 residential markets tracked by broker Knight Frank. Dubai's rental market will "remain weak" with declines of 1.5% to 2% expected during the second half of the year, according to a separate report by consultancy Cluttons.
"You will see a slight change in the real estate market, as you have witnessed in the hotel industry," Manchanda said.
Dubai responded to a dearth of budget hotels by building more of them over the past few years.
Nakheel already has a presence in the low-priced housing segment with its International City and Discovery Gardens communities, where it leases apartments and has also sold properties. Nakheel was bailed out by the Dubai government after the company almost defaulted on a $3.52bn Islamic bond in December 2009 because of a credit-market freeze.
A recovery in Dubai's property market enabled Nakheel to repay 7.9bn dirhams in loans to 31 banks in 2014, nearly four years ahead of schedule.
Jebel Ali Gardens will benefit from its proximity to Dubai's Expo 2020 trade fair site and three theme parks that state-controlled Dubai Parks & Resorts is constructing, Manchanda said.
"It's a part of the city that will start gaining a lot of prominence in the coming two to three years," he said.
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