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Rolling the Dice: Addressing Housing Risks, Supply Gaps & Rising Costs in the Middle East


Jul 31, 2025
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Introduction: The Core Challenge  

Across the Middle East, rising property prices and a chronic shortage of housing supply are creating stark affordability risks for millions. In Riyadh, home prices have surged by 81% and apartment prices by 56% since 2020, putting ownership out of reach for many Saudi residents—especially considering a homeownership rate of only 53.2% in the capital. A similar picture is unfolding in Dubai, where rent for a basic one bedroom averages $1,400/month, while the majority of low paid migrant workers earn just $300–550/month, forcing them into overcrowded, unsafe housing. With strong urbanization rates—56% today, rising to 68% by 2050 in MENA—the demand for affordable housing is only increasing. 

Advancements & Benefits: Understanding the Stakes 

Risk of Asset Mobility & Pricing Shocks 

Many markets in the Gulf face high volatility. In cities like Dubai and Riyadh, 30–80% of households struggle to afford shelter due to inflation, borrowing costs, and supply constraints. Interest rates that shift mortgage costs, combined with speculative price jumps, make assets highly mobile and financial projections risky. 

Supply Shortlash Overwhelms Demand 

Knight Frank projects Saudi Arabia must build 115,000 new homes annually for six years just to meet current demand—yet much of the new stock focuses on luxury or giga projects like NEOM and Diriyah Gate, leaving middle income residents underserved. Dubai has plans for 17,000 new affordable units, but it still falls short of demand amid growing rental prices and limited low cost options. 

Material vs. Labour Costs & Inflation 

Construction costs are heavily skewed toward labor, which is increasingly scarce and expensive. Riyadh averages $2,593/sq-m in build costs—far above Dubai ($1,874) or Abu Dhabi ($1,844). Labor shortages and competition from mega-projects drive up wages and reduce productivity in affordable housing initiatives. Meanwhile, material side costs increase by 30–40%, further squeezing budgets, though not to the same extent. 

Recession Risk & Affordability Crisis 

With housing costs rising and borrowing rates climbing—from 3% to 5% in Saudi Arabia—mortgage accessibility has dropped sharply. Residential lending volume fell, and further corrections in global oil prices or slowing economies could trigger demand shocks. For many Saudis and expats, median budgets fall well below market prices, with 40% unwilling to spend over SAR 750,000, while average two-bedroom units often exceed SAR 800k. 

Who Needs to Act—and Why 

  • Affordable housing developers & government agencies: To answer the persistent gap in middle-income housing, especially given tight land availability and labor costs. 
  • Property owners & asset managers: To mitigate risks of vacancies, pricing volatility, and mobile tenant demand in uncertain markets. 
  • Investors and developers: To model political, economic, and interest-rate risks in regions where affordability affects 30-80% of households. 
  • Financiers & policy-makers: To design structured credit and subsidy mechanisms targeting affordability while de-risking portfolios. 

These groups are positioned to benefit significantly by integrating platforms and modular, data-driven models that anticipate cost pressures and optimize workflows. 

How RealCube Makes It Possible 

At RealCube, we empower stakeholders in the Middle East to reduce risk, enhance visibility, and improve outcomes in affordable housing: 

  • Real-time cost monitoring: Track labor escalation, material line items, and schedule delays as they unfold—critical in markets with $2,500+ build costs per sq m and inflation-prone labour costs. 
  • Scenario planning tools: Simulate price shocks, vacancy trends, and financing shifts—essential when 40% of buyers won’t stretch beyond certain price ceilings. 
  • Modular and digital integration: We link modular construction planning (e.g. prefabricated components) with cost forecasting and project-wide dashboards, streamlining delivery despite tight resource constraints. 
  • Streamlined end-to-end workflows: From land acquisition and permitting through leasing and maintenance, our cloud platform supports transparency, efficiency, and stakeholder collaboration. 
  • Policy & subsidy planning insights: Identify performance levers to optimize financing guarantees or affordability incentives like Saudi’s “Sakani” or Dubai’s affordable housing schemes. 

By aligning analytics, planning, and execution, RealCube helps navigate high-risk markets—balancing affordability and growth with measurable performance. 

Conclusion: Seizing Opportunity Amid Crisis 

The Middle Eastern housing market is under strain: supply shortfalls, high labor costs, rapid price escalation, and affordability gaps for 30–80% of consumers. Yet these challenges also point to opportunity—particularly for those who embrace modular solutions, data-driven platforms, and integrated property workflows. 

RealCube is more than a management tool—it’s the backbone for building stability in a volatile, expensive, and fast-evolving environment. For developers, asset managers, financiers, and policy-makers dedicated to tackling the housing crisis, we enable better decisions and tangible impact—today and into tomorrow. 

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