The Unique Demographics of GCC Countries and their Impact on the Housing Market

By: Rudayna Abdo, AHI Urban Planning Adviser

There has been a magnified interest in housing development across the GCC (Gulf Coast Countries) in the last few years to which I account there being four direct or indirect major factors:

 

§    Population growth. The population across the GCC has grown six-fold in the last 4 decades, from 7.8 million in 1970 to 46.2 million in 2011 [1].

§    Rapid urbanization. The Gulf being one of the most urbanized areas in the world with 75% of people living in cities [2]. This growth was a result of the oil boom and its associated implications on employment, wealth and social change, and the ensuing migration of rural/desert dwellers to large cities. 

§    Rising unemployment. Youth unemployment in the Arab world is now at 25% and in the coming decade, the Arab world needs to add 75 million jobs [3] – an increase of 40% on today’s numbers.

§    Political conflict.It is fair to say that some governments have responded to the internal political tensions spurred by the Arab Spring by expanding or declaring new housing development mandates to appease their citizens.

 

The provision of affordable housing is really the only concern – it is the gravely undersupplied segment, with high-end housing being oversupplied in places like Abu Dhabi. Estimates for the shortfall in Saudi Arabia, for example, start at 400,000 (according to Jones Lang LaSalle; “Why Affordable Housing Matters” Sept. 2011) but much higher figures than that have been quoted by some sources. In Bahrain, the JLL Sept. 2011 figures report a 40,000 shortfall, 20,000 in the UAE and 15,000 in Oman.

 

Abu Dhabi villa

An Emirati villa in Khalifa City A, Abu Dhabi

 

The mandate of the GCC governments is to deliver housing for their nationals. However, it is interesting to take a quick look at the demographics of these countries.

 

The most populous of the Gulf countries is the Kingdom of Saudi Arabia, with a population of 28.5 million [5]. The next by a large margin is the UAE at 8.5 million, followed by Kuwait at 3.7 million, Oman at 3.1 million, Qatar at 1.8 million and tiny Bahrain at 1.3 million. The share of expatriates in these countries, however, varies widely to a low of about 30% in Saudi and Oman, to a staggering 85%+ in Qatar and the UAE (according to certain estimates [6]). The overall share of the expat portion in the last ten years has moved from 36% (2001) to practically half of the entire population: 48% in 2011 [7]. This is a significant portion of the population which has divergent housing needs depending on its economic and social standing.

 

CropperCapture[6]

 

To look at it in general terms, the housing for the full spectrum – nationals and expats – falls into the following categories:

 

Housing for nationals:

  • Government housing – for middle and low income nationals. This is the segment of the population that can be a significant portion of the population (e.g. Saudi) or a small portion (e.g. UAE) but is largely driving the housing development mandate.
  • Private housing –for high income nationals. This segment of the population can afford and cater to its own housing needs. It is not clear whether this segment benefits from the national housing programs (free land; potentially free house).

multifam Abu Dhabi CBD (1)

Low and middle-income multi-family housing in Abu Dhabi’s CBD


Housing for expatriates:

  • Manual workers – who are typically in the country on a two or three year visa and whose housing needs are provided by their employer in camps (the type and quality of this housing is another topic by itself).
  • Domestic workers – who typically reside with their employer and thus have their housing needs met.
  • Low to middle-income singles and families – see below.
  • High income families – who can navigate the fluctuating market and, even if inconvenienced, can survive the peaks and troughs of housing prices.

 

It is the low and middle income bachelors and families that fall through the cracks in the above equation. This is the segment of the population that must provide its own housing yet is at the mercy of the supply and price game. It is also the population segment that is, by and large, being entirely ignored by policy makers. It is these expats who make the Gulf countries run and operate and without whom services will severely suffer. If policy makers don’t address their housing needs they may have to contend with much larger concerns in the years ahead.

Mussafah labor camp-Hoagland

A labor camp in Mussafah, Abu Dhabi

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