The government of Dubai gifted more than 360 parcels of land to Emiratis last year, representing plots valued at nearly $550m in total, official figures showed.
Data from the Dubai Land Department show the Gulf state donated 368 plots to UAE citizens in 2011, a decline of 14 percent on the 426 handed over in the year-earlier period.
Falling property prices saw the value of the plots tumble 71 percent to $549.7m, down from nearly $1.9bn in 2010, as Dubai’s struggling real estate market dragged down land values.
It is traditional for rulers in the UAE to gift land to their citizens, as part of the Gulf country’s far-reaching social welfare system. The UAE, one of the top five world oil exporters, enjoys one of the world's highest per capita incomes of around $48,600.
Abu Dhabi in July granted more than 1,230 residential plots to Emiratis in the west of the country, following on from a pledge to spend AED7bn ($1.9bn) on housing loans for locals.
In March, the federal government vowed to spend $1.6bn on electricity and water networks in the northern emirates, which are in sharp contrast to oil-rich Abu Dhabi and trade hub Dubai.
GCC governments have placed a fresh focus on low-cost housing in the wake of the tide of unrest that swept the Arab world last year. According to Jones Lang LaSalle, the wider MENA region has an affordable housing shortfall of 3.5 million homes, with nearly half in Egypt.
Saudi Arabia has the largest shortfall in the Gulf of 400,000 homes followed by 40,000 homes in Bahrain, 20,000 in the UAE and 15,000 in Oman, the property consultancy said.
But the GCC’s rising land prices are hurting state-led plans for low-cost housing and have deterred developers from building low-cost homes, as they are unable to cover their costs.
“The land costs are themselves are a major deterrent and have pushed up the pricing to levels where developers can’t make any money out of developing affordable housing,” Craig Plumb, head of research for the MENA region at JLL, said last month.
“There are a number of constraints and land is clearly one of those but so is the cost of servicing the land. A lot of the sites… tend to be remote from the established urban area so servicing them with power and roads can significantly add to the land cost.”
Emaar Properties, developer of the world’s tallest building, in November said it was in talks with several UAE emirates to roll out affordable housing schemes.
Chairman Mohamed Alabbar told Arabian Business he saw opportunity for properties in Dubai at a price point of around AED500,000 ($136,000).
“We're talking to a few emirates. I'm going to focus on Dubai to start with,” he said. “We are talking about [property] of maybe AED550,000 for someone with an income level of around AED12,000 a month.”