Bloom Properties is planning to build 3,000 flats in Abu Dhabi which can be rented out for as little as Dh45,000 a year.
The Abu Dhabi-based developer said that it planned to build five blocks of what it calls “mid range” housing in the capital after buyers reserved 182 of the 343 apartments it is selling at its Bloom Heights project in Jumeirah Village Circle in Dubai.
Bloom, which is owned by Abu Dhabi conglomerate National Holding, is showcasing Bloom Heights at this week’s Cityscape Global exhibition in Dubai.
The developer plans to rent out half of the 686 flats aimed at “mid-market” buyers which are scheduled to be completed in early 2019.
Prices in the other half range from Dh360,000 for a studio apartment of around 40 square metres and Dh620,000 for a one bedroom apartment of around 74 square metres.
In Abu Dhabi Bloom plans to build three similar projects on a 2 million square metre plot of land it owns in Mohammed bin Zayed City close to Abu Dhabi International Airport. The developer also hopes to build another two similar schemes at Al Raha Beach and in Baniyas.
“There is so much demand for this sort of product in Abu Dhabi and Dubai that we do not think that either we or other developers out there will be able to satisfy demand,” said Sameh Muhtadi, the Bloom chief executive. “We expect this sort of product in Dubai to appeal to people who would otherwise have to commute to Sharjah to live.”
He estimated that the new project would offer rental yields of up to 11 per cent.
Bloom follows a number of other UAE developers which have recently announced housing projects aimed at the UAE’s mid-market rather than its luxury segment, where most of the homes being built are currently positioned.
Last month Aldar started construction work on its first mid- market project, 400 apartments in Meera Shams on Reem Island. Sales on the project were launched last year with prices starting from Dh915,000.
In Dubai too, as the strong US dollar to which the UAE dirham is pegged makes Dubai property more expensive for many overseas investors, a handful of property developers are attempting to exploit demand from the mass market of residents.
These include Nshama, which has launched 2,000 supposedly mid-market apartments with one-bedroom flats starting from Dh614,000 and three bedroom town houses at just below Dh1 million.
Building materials firm Danube is also attempting to position itself in this market, launching a series of blocks in Al Furjan at prices starting at about Dh430,000 for a studio flat.
According to property broker JLL, only 22 per cent of new homes launched last year in Dubai could be classed as affordable to middle-income households.
JLL said that middle-income families in the UAE can afford to pay annual rents of up to Dh72,000 or mortgages on houses worth Dh790,000.
According to JLL’s definition, which includes the middle third of all earners nationally, there are more than 820,000 middle-income households in the UAE, representing almost 40 per cent of the population.
Bloom is also planning to build two new schools in Dubai and four new nurseries in Dubai, Abu Dhabi and Al Ain.