Dubai: New supply coming onto the market could cause a further decline in housing rents which, if they go below Sharjah's levels, is expected to trigger a massive reverse migration of residents towards Dubai from neighbouring emirates.
This will reduce pressure on Sharjah's infrastructure and power consumption, officials say.
"Lots of families are moving back to Dubai as rents are becoming more attractive and also it makes more sense to live and work in close proximity," Elaine Jones, Chief Executive of Asteco, one of the largest leasing agencies, told Gulf News. "It's been happening for a while already."
Power cuts
The latest round of power cuts has also influenced many families, she said.
These factors are expected to soften the rent market in Sharjah.
Rents in Dubai have been easing since last year, impacted by the global financial crisis. A one-bedroom apartment in a new building is now available for Dh36,000 to Dh50,000 depending on the location, while rents for studio apartments are returning to the 2004-05 level, making Dubai more attractive.
One of the key reasons for declining rents is the delivery of new projects, Jones said.
"Over the past year a large number of properties have been delivered and quite a lot of properties are coming on stream now, which is going to put further downward pressure on rents," she said.
Dubai Properties Group on Wednesday launched a campaign to promote new supplies, offering studio apartments for Dh23,000 and two-bedroom villas for Dh64,000 per annum.
"The new initiative comes as part of DPG's focused strategy to help customers identify, evaluate and prioritise their individual leasing requirements," it said in a statement.
Wasl, a Dubai Government asset management arm that manages 20,000 residential units, has been offering studios from Dh27,000, one-bedroom apartments from Dh36,000 and two-bedroom apartments from Dh47,000 in Muhaisnah.
"Lease rates in most areas, in both the residential and commercial markets, will fall in the coming months, especially for lower quality buildings in the least developed and integrated communities," Jesse Downs, Director of Research and Advisory Services, Landmark Advisory, said in a statement."
Following the recent launch of four new developments in Dubai, DPG has expanded its leasing channels to accommodate the high demand for affordable villas and apartments in the region.
Group CEO Khalid Al Malik said: "This campaign is designed to connect with a wider customer base by leveraging various media platforms to communicate the remarkable scope of our real estate portfolio. It's also essential to demonstrating DPG's commitment."
Unaffordable move to sharjah
A large number of people working in Dubai moved to Sharjah during the economic boom from 2002 to 2008, as rents in Dubai continued to skyrocket, making them unaffordable for most middle-income families, a situation that prompted the government to introduce a rent cap. As a result, many people who work in Dubai commute to their homes in Sharjah every day - a trend that will soon be reversed. "It's probably a good thing for Dubai as the city becomes more affordable," said Asteco's Elaine Jones whose company has more than 4,000 residential units under management.
