Natalie and Sean Calder are, more or less, your typical western expats in Dubai. They live in Marina Residence, adjacent to Shaikh Zayed Road in Dubai Marina, and intend to work here for a few years to save some money and then return to their homeland, New Zealand. Although they're not fussed about living in an apartment, they found that last year's decline in rents presented an opportunity to upgrade.
Decline in rents
"We moved over here from JLT (Jumeirah Lakes Towers) because the rents had dropped," Natalie says, looking across Shaikh Zayed Road at her former home.
"We pay roughly the same rent for a one-bedroom apartment as we did at JLT, but we now pay four cheques instead of one, and our lifestyle is so much better." On their doorstep are the Dubai Marina Yacht Club, several cafes and a supermarket. They are also within walking distance of hotels, the beach, and The Walk. Every evening, they enjoy a stroll along the Marina.
"We would never walk in JLT," she says. "You'd have to dodge trucks, buses and bulldozers — it's a construction site." Dubai's rental decline resulted in many tenants upgrading rather than negotiating better deals with existing landlords. And there's no better example of this than the exodus from JLT to Dubai Marina. One development mostly complete, the other a work in progress - you could say JLT is the ‘poor man's Marina'.
One reason for the divide is that JLT is less developed, explains Sylvia O'Connor, senior leasing consultant, Better Homes. "Until we see amenities, landscaping, shops and restaurants come online, most people will prefer Dubai Marina and Jumeirah Beach Residence (JBR) over JLT."
She expects rents in JLT to fall even more this year, yet advises tenants looking for a larger apartment not to rule out JLT. "Some of the buildings are better quality and larger than in Dubai Marina. People should be looking for apartments with views."
The new JLT
Things change rapidly in Dubai, but nothing could prepare this writer for the changes JLT has undergone in the past seven months. Having vacated an apartment there in October, going back for this assignment revealed much progress in completed projects and retail in the area.
Often unseen from the road, a number of podiums now have grocery shops, beauty salons and other retail outlets. Seven months ago, the only offering was a café and a small overpriced grocery store at the Green Lake Towers.
Access has also improved. With the Marina Metro Station open, residents of the northern part of JLT have greater access to public transport and a walkway through to Dubai Marina. There's even greenery. Landscaping is edging its way around the northern lakes, and walkers and joggers can be seen burning up the tarmac.
Structural inspection
Build quality varies between buildings - a point of contention for residents. Gibran Bukhari, sales manager at Coldwell Banker, cautions buyers or tenants to check units and towers thoroughly.
"Build quality, fittings and amenities differ substantially in JLT. Some buildings are made well and some have cut corners and cost, when it comes to finishings. In saying that, I see this in many other communities. There's good and bad everywhere."
At the southern end, many towers are still shells. Yet one of the shining lights here was the opening of the Bonnington hotel, offering guests and residents restaurants, cafes, a bar and a spa. Also in this area, the Laguna Tower will feature a Mövenpick hotel, although the developer won't commit to its completion date.
Additionally, close to Bonnington is Almas Tower - the tallest building in JLT, its centrepoint and home to the Dubai Multi Commodities Centre (DMCC). Scheduled for its official launch in August, Almas is already occupied with retail planned for its ground floor.
The right mix
Those with gripes about JLT should bear in mind it isn't purely a residential development. A free zone for precious stones and metals, there are gold smelters instead of Spinneys and diamond vaults instead of boutiques.
Nonetheless, Ahmad Bin Sulayem, executive chairman of DMCC, believes the location will draw both end-users and companies.
"Right now, JLT is a good deal for residential and offices," he told . "You know, companies that are at the other end of Shaikh Zayed Road who want to get away from the traffic. And I think that's healthy - spread out the traffic in Dubai. Move it into other communities."
Although, as Ahmad admits, there are some sub-developers at JLT still lagging, there are others - like Damac Properties - that have delivered. Damac has two towers at JLT - Lake View and Lake Terrace.
Niall McLoughlin, senior vice-president of Damac, says, "We could see the potential for JLT to become a great community neighbourhood for all types of customers - from young single professionals to families, to those people who simply wished to invest in an attractive rental property."
Although it has teething issues, he believes JLT has the right mix.
"Any master development always takes time to mature and sometimes customers who move in at the beginning of a development may experience some disruption or shortage of facilities during the early stages. However, we believe a well-planned master development with the right mixture of retail, waterways, green spaces and walkways for residents to enjoy will always be very desirable."
Location, location, location...
Despite the oversupply in Dubai, offices at JLT have attracted interest in recent months. "We have seen a serious increase in enquiries recently," says Porush Jhunjhunwala, head of commercial leasing, Better Homes. "We believe the majority of these are coming from other Dubai free zones, as well as some from new companies entering the market. The advantage of setting up an office in JLT over other free zones is purely cost and location. Proximity to main Dubai and Shaikh Zayed Road is a key advantage for JLT vis-à-vis somewhere like Dubai Silicon Oasis."
The fact that DMCC has speeded up the process of licensing in JLT is another factor drawing tenants, he says. "Rents are low compared to other areas, which has created interest among tenants." It's a similar story on the residential front. "What makes an area sought-after these days, is price and accessibility," says Gibran. "The amenities and landscaping are an added bonus. Despite the construction, JLT has a lot to offer when it comes to the size of apartments and the location. This makes it attractive to people looking in this area. Dubai Marina will always be more expensive compared to JLT due to its access to the beach, restaurants and leisure it offers. JLT, however, being so close to all of this, has the added advantage of an operational metro station… for some this makes it a more attractive option."
Lease peace
The good news for end-users is that investors at JLT are beginning to be more realistic about their options, looking at leasing out units rather than selling them, says Gibran. "We are slowly starting to see a drop in property that was overpriced as owners believe the market has changed for the long haul. For example, two units in the same building with identical floor plans and views may have a difference in price of about 30 per cent. Some owners who purchased during the high time still have mortgages inhibiting them from selling for less than the borrowed amount. "Financially, the best choice for them would be to rent out the unit, as they can't sell for that price now.
"In my opinion, rents will see a further reduction over the next 12 months as supply increases. I believe three-bedrooms and above will see the largest drop, as rental rates are still high on these. However, niche market properties will hold higher value as supply is less."
Rents have dropped. In Landmark Advisory's April Leasing Guide, one-bedroom rents range from Dh50,000-Dh90,000, compared to an upper limit of Dh110,000 in the Marina.
So will JLT ever rival Dubai Marina? Gibran says, "Price aside, location is a key factor that JLT offers and as such, once everything is in the right place and construction is replaced with proper roads JLT will become a highly demanded place to live and work. Once JLT becomes more aesthetically pleasing, more people will be attracted to live in the community."
For Natalie, however, that time hasn't come. "It's great to hear that JLT has hotels, shops and a metro station. But I can't see us going back."
