The MENA region of the Middle East and North Africa is estimated to be facing a shortage of around 3.6 million affordable homes over the next five years, and the governments and property developers in these countries need to combine their efforts to solve this problem.
The most populated country in this region is Egypt, and Jones Lang LaSalle estimates the shortfall there could be as high as 1.5 million homes. Morocco is estimated to need around 600,000 homes, while Iraq needs around 1 million housing units. This problem isn’t just confined to less wealthy countries, as even Saudi Arabia needs 400,000 more affordable homes.
The report in Kuwait Times highlights the fact that lack of affordable housing was one of the reasons for the turmoil which has affected the region this year. The problem is that although many of these countries have seen their GDP expand impressively over the last few years, most of the wealth has gone to those who are already rich, while lower earners have seen their pay stagnate, and there have also been insufficient new jobs created. With much of the wealth being confined to the top earners, most of the developers have concentrated on building luxury homes.
Many in this region are still relatively poor, but the population is expanding rapidly, increasing the need for new, affordable homes. Most of the new homes already built are beyond the reach of people on average incomes, and those who can afford to pay a mortgage are finding difficulty in obtaining finance. Property prices in Algeria cost around 30 times the average annual salary, while in Egypt this figure is 18.4 times. To put this into perspective, the average US home is only 2.8 times the average annual salary.
Saudi Arabia’s government has already set aside around $130 billion, which is about 30% of its annual economic output, to be spent on social projects including homes. The interim government in Egypt has ordered the housing ministry to oversee the construction of 1 million affordable units by 2015, but this target may prove a little optimistic as it would mean finishing 550 homes each day.