Some of Sharjah’s newest residential skyscrapers are only a few metres away from Dubai’s borders. A simple fence with a pedestrian opening separates Al Nahda Sharjah and Al Nahda Dubai, with Sharjah taxis and buses on one side and Dubai taxis and double-decker buses on the other. During the early morning hours of weekdays, thousands of commuters cross from the Sharjah side to catch buses and taxis towards the Stadium station of the Dubai Metro Green line. It comes as no surprise that the same phenomenon is observed during the evening peak hours as these commuters return to their homes in Sharjah and beyond. Many professionals working in Dubai prefer to live in the northern emirates, particularly Sharjah, for various lifestyle reasons. However, we believe that a very high proportion of the estimated one million people who work in Dubai but live in the northern emirates have done so to cut their living costs and maximise their savings, which leads us to one important question: How much of the total cost is cut and how much savings are made?
ValuStrat research has analysed, among other things, the latest official monthly wage statistics provided by Dubai Statistics Centre (DSC) and traffic and public transport statistics provided by Road and Transport Authority (RTA).
Starting with monthly wages in Dubai, around 68 per cent of the working population earn less than Dh5,000, many of whom are construction labourers, factory workers and drivers who would have been provided with some sort of labour or staff accommodation. Others in this category who don’t have accommodation provided by their companies would normally resort to sharing accommodation.
Around 11 per cent of Dubai’s workforce earn between Dh5,000 and Dh10,000, and this category can afford to live in Dubai in a small studio apartment for around Dh28,000 per year or a one-bedroom apartment for Dh37,000 per year in International City. The remaining 20 per cent or so earn more than Dh10,000, which would enable them to afford two-bedroom apartments in Al Nahda Dubai for Dh50,000 per year or more pricey options depending on their monthly housing budgets. The most affordable three-bedroom apartment rentals can also be found in Al Nahda Dubai for Dh75,000 per year.
Rental advantage
Sharjah and the rest of the northern emirates have an edge when it comes to rents, as the low-end rentals in Dubai compare with average rentals in the northern emirates. For example, the average rent for a studio apartment in Abu Shagara in Sharjah is Dh25,000 per year, and a one-bedroom apartment in the same area has an asking rent of Dh30,000. Incidentally, Ras Al Khaimah’s average rents are slightly higher than Sharjah’s.
Having said that, if we compare averages with averages, then Sharjah and the rest of the northern emirates are typically lower by 50-65 per cent when compared with Dubai, so one can almost guarantee an extra bedroom for the same rental budget in the northern emirates, or at least, a larger residential unit. However, Dubai buildings typically offer better facilities and provide free car parking by default.
Congested commute
As far as daily peak-time journeys from the northern emirates to Dubai and back are concerned, we found that it can be anything from two hours up to five hours per day. According to an RTA estimate, 20 hours are spent in traffic between Sharjah and Dubai each week due to an estimated 33,500 private vehicles passing through the borders during peak morning hours. On average, 370,000 vehicles pass between the two emirates per weekday.
Public and commercial vehicles share the same road networks, leading to severe traffic congestion in the main and arterial highways. On a macroeconomic point of view, the traffic congestion cost Dubai’s economy roughly around Dh4.6 billion in lost time and fuel in 2014. ValuStrat research found that on an individual level, the fuel and Salik toll gate costs when driving from Sharjah to Dubai during weekdays range from Dh4,800 to Dh10,500 per year. Additional costs stem from more frequent car maintenance fees and accelerated depreciation in value, with additional car ownership expenses estimated to be at least Dh12,000 per year. While the RTA continues to improve the road infrastructure, the mere fact that the vehicle average annual increase is 8.2 per cent, one of the highest worldwide, means that traffic congestion problems are not going away anytime soon.
Living north and working south generally means you’re going to have to join the congested daily commute, which leads to many lost hours in traffic per day. Public transport costs for the same journey could range from Dh6,480 to Dh8,640 per year. Interestingly, due to constant traffic congestion, commuting by car or public transport takes the same amount of time on average, and in some cases using just the Metro could mean shorter commute times.
Quality of life
Shorter commute times should not be underestimated when deciding on an accommodation’s location, not just for apparent tangible costs, but for indirect costs related to improving the quality of life and more importantly, maintaining a healthier life. Recent studies have shown that long commutes can negatively impact health and fitness, while congestion could lead to bad driving habits, stress and high blood pressure.
Summing up all the major expenses involved, we found that while the northern emirates are seemingly more economical when compared with Dubai, research has found that there are affordable locations within Dubai that are competitively priced. Choosing cheaper or similar-priced but larger apartments in the northern emirates could raise major commute issues. One must bear in mind both tangible and intangible costs resulting from stressful commutes.
In conclusion, housing expenses should not be the only deciding factor for moving to locations farther away. Sometimes, it pays just to avoid the daily traffic.
