Contemporary middle-class dwellings in Dubai : an assessment of housing space over-consumption and its policy implications
Before the discovery and exploitation of oil in the international markets during the late 1960s, the United Arab Emirates (UAE) was considered as one of the most deprived regions of the world. However, since then the country has enjoyed remarkable rise in national economic prosperity and sharp increase in personal and household income. Surplus oil economy and adoption of generous welfare programmes by both UAE federal and Dubai local authorities have entirely transformed the social, economic and physical landscape of the country. One such area that has been highly influenced by the new wave of transformation and modernization is housing. Housing conditions in the pre-oil era were grim as more than 80% of the inhabitants were housed in overcrowded makeshift dwellings made of palm leaves referred to locally as barasti. By the end of 1960s, housing conditions were undergoing major improvements as the government began to use oil money in subsidizing both income and housing in the form of free serviced residential plots for all middle-incomen ational householdsa nd guaranteedh igh-paying public sectorj obs. With better income and increasing subsidies, housing consumption among newly emerging middle-income households during this period had improved dramatically as overcrowding dropped from 3.2 to only 1.6 persons per room and the per capita share of domestic space rose from 15 to 32 square metres per inhabitant. Following the examples of other oil-rich Arab Gulf states such as Saudi Arabia, Kuwait and Emirate of Abu Dhabi, in 1993, the Dubai government introduced a new housing policy scheme aimed at providing middle-income households with interest-free housing loans in order to facilitate their access to what the government calls adequate owner-occupant housing. The value of each loan was set at AED 500,000 ($136,240) with a repayment period of 25 years. Although the value of the loan was set to enable middle-class households to build and consume adequate housing, adequate housing itself has never been clearly defined. From the time since the interestfree loan programme was introduced, typical middle-class dwellings have more than doubled in size and average housing consumption rate has climbed to 71.5 square meters per person exceeding all national, regional and international rates. Moreover, the average number of person per room has declined sharply to only 0.6. This research aims to study the various causes behind the major increase in the size of the contemporarym iddle-classd wellings and the subsequenrt ise in the rates of housing consumption among this study population. It aims to examine the implications of the current interest-free loan policy and the consequences of the prevailing high levels of housing consumption for loan beneficiaries and other applicants. The interest-free housing loan policy has several shortcomings. It has triggered high demand in relationship to supply. Because of shortage in budget, high value of individual loans and very long repayment period, a major backlog of eligible applications has emerged and waiting time has been increasing steadily. Moreover, the policy has also enabled the few to over-consume scarce housing resources, while providing no assistance for the majority. The interest-free loan policy does not match the specific needs and preferences of the target population. It assumes that all middle-class households have similar housing needs and does not recognize in any way difference in income, household size and aspirations within the various target population subgroups. Additionally, the strict ban on the sale of the dwelling units imposed by the government has trapped many households in large and mostly under-utilized dwellings.