UAE | General

Search is on for cosier homes in the UAE

Falling rents in Dubai has sparked a migration from Sharjah and Ajman to Dubai

  • By Manoj Nair, Associate Editor
  • Published: 00:00 March 12, 2011
  • Gulf News

Aerial view of Shaikh Zayed Road
  • Image Credit: Megan Hirons Mahon/Gulf News
  • Aerial view of Shaikh Zayed Road
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Dubai: Dubai's landlords with properties in neighbouring Sharjah are starting to take a keen interest in weather forecasts, particularly those relating to the approaching summer.

If summer turns out to be long and sweltering and Sharjah's tenants continue to get hit with the power outages chronic during that time of the year, some of Dubai's secondary neighbourhoods — and even those as far away as Discovery Gardens — stand to benefit.

Lending a hand to a new wave of migration is the continued softening of rents at these locations in Dubai. With the volatility in the local economy also having subsided, many of Sharjah's residents would seek out new addresses, preferably in recently completed properties. At least that's the thinking in Dubai's property circles.

A.A. epitomises the kind of tenant these landlords are looking for. It was late last year when A.A. decided to make a switch to a two-bedroom apartment in Al Ghusais after spending the better part of ten years in a one-bedroom unit in Sharjah. "People say that things have improved beyond sight in the time taken to commute between Sharjah and Dubai during the office hours, and it's true," he said. "But trying to exit Sharjah in the evenings, especially between Thursdays to Saturdays, is still tiresome, and that's having an impact on the quality of life.

"By deciding to shift to Al Ghusais, it means a 15 per cent increase in my rental expenses, but for the hours saved off the roads, it's proving to be money well spent."

A surge in enquiries is expected as schools in Sharjah close for the this academic year.

"Affordable quality" is what tenants are looking for, and Dubai's landlords with rooms to spare are hoping this sentiment would drive them their way.

"We expect that older properties [in Sharjah] which have been neglected in terms of investment and maintenance will be the first ‘victims' in the shift in market dynamics," said Ihsan Kharouf, director at the Sharjah office of Cluttons.

For them, there is no shortage of property options offering the right size, amenities, location and — towering above all other considerations — the rental rate.

Take the Al Nahda locality, which is shared by Dubai and Sharjah, as a case in point.

While there is a 25-30 per cent differential between the two locations, the Dubai side of Al Nahda is experiencing a significant influx from its northern neighbourhood. A two-bedroom unit in Dubai's Al Nahda currently ranges between Dh45,000 and Dh47,000 annually against the Dh32,000 to Dh35,000 a similar one would fetch in Sharjah.

Improving outlook

While the gap may seem substantial, an improving outlook for the economy means residents are more willing than ever before to switch. More-over, while average rentals in Sharjah may have plumbed the depths or are close to those in competing locations, Dubai still has room to manoeuvre at the lower and mid-end. Dubai's landlords can also throw in the quality factor to good effect.

"There is a perception Dubai properties have been finished to a higher quality, which may also be a symptom of the scale of development that took place in Sharjah," said Kharouf. "The difference in supply is another reason for the rate differences."

Interestingly, locations further removed from Dubai are holding their own in retaining their residents. The upscale neighbourhood of Al Majaz, particularly in and around the Corniche, has seen limited resident migration, and a similar situation exists among the budget-conscious Al Khan locality.

"The Sharjah Corniche with its lagoon and sea views is still the most popular draw for tenants in search of a residential destination," said Paul Musson, manager for residential sales and leasing at Better Homes. "More towers are being handed over in this area along with opportunities for GCC nationals to purchase high-quality apartments… so demand remains consistent."

These are good times for tenants and motorists in Sharjah and Dubai. Falling rents in Dubai has sparked a migration from Sharjah and Ajman to Dubai and there has been movement within Dubai too as housing units in upmarket areas become more affordable. This shifting of populace has had a soothing effect on the traffic between Dubai and Sharjah. A Gulf News team of reporters investigates and comes up with these findings.

Quality factor

Call it the Great Migration, version 2.0. If the past two years were more about those in the northern emirates flocking to Dubai to make full use of the falling rents, this year it is driven by resident movements within the city.

In the coming months it will only get bigger and, for these residents, it’s definitely better in what market observers say is an unceasing flight towards quality.

Properties in what were strictly premium locations such as Business Bay and Dubai Marina are now within reach of a much broader resident base.
Secondary locations such as Al Barsha, which is seeing a steady flow of completed apartment blocks, and Al Ghusais are also beneficiaries of the migratory shift towards quality.

Demand for Al Barsha — and even Jumeirah Lakes Towers — has spiked from the recent relocation of quite a few schools to that locality. But suffering as a consequence are locations such as International City and Discovery Gardens, as their erstwhile residents seek upgrades to the quality of life elsewhere.

 Variations

“There are quite significant variations in rentals across the various locations in Dubai based on quality, so much so it even exists for two buildings right next to each other but answering to differing quality,” said Richard Paul of Cluttons.

“Rentals are still in decline in the city, but those properties of poorer quality are suffering more.

“Residents are exploring ways to see how far they can stretch rental budgets, but no longer seem willing to sacrifice quality just to pay less.”

It seems for many of Dubai’s residents, they can’t wait to make a move. P.S. stays in a two-bedroom apartment which he owns in International City. But come summer, he will be looking for an option elsewhere in the city. “The rapid erosion of rents in International City is seeing more bachelors moving in and sharing apartments, and it’s quite visible in the last six months,” he said.

“This more than anything else has diminished the attraction of staying here for families.”
What he intends to do is rent out the apartment at the prevailing rate there and pay more to move into a rented one in Al Barsha. “It means higher expenses for me, but quality of life is what’s more important now. And it’s available in Dubai at the right values.”

More affordable

So, what’s available for those residents going for a qualitative upgrade? Dubai Marina is an obvious beneficiary and increasingly so is Business Bay, or at least those high-rises abutting Shaikh Zayed Road.

“We could see this happening with studios in Business Bay starting at Dh35,000; one-beds at Dh47,000 and two-beds at Dh65,000,” said Laura Adams, the residential sales and leasing manager at Better Homes.

“It’s now becoming more affordable to live closer to Dubai thanks to the availability of lower rental rates, resulting from the unfinished residential buildings which still lack many of their planned amenities.”

Paul qualifies the prevailing demand for Business Bay by saying it’s only there for those high-rises — these are the Executive Towers — where the access road networks and support infrastructure are complete. “As to the rest of the completed developments there, there’s still the feeling it’s in the middle of nowhere and will take a longer gestation period for take up,” he added.

As has been the case for the past two years, the ball remains unfailingly in the tenants’ court.

Rents in Ajman are plunging

Rents in Ajman are plunging due to the abundant availability of apartments, residents said. 

Several residents attributed the surge in availability of apartments to the steady outflow of residents to Dubai where the rents have fallen drastically.

“Rents started declining around six months ago and are still continuing to fall since many people are moving to other emirates,” Fadil, an apartment broker in the city, said.

Rates

He said annual rents for two-bedroom apartments have fallen to Dh18,000 to Dh25,000 while those for one-bedroom apartments are about Dh14,000 to Dh16,000.
“Earlier many people who worked in Dubai opted to live here because it was much cheaper, but this has changed since the rents in Dubai have come down significantly,” he added.

Dhanesh Khorana, a former Ajman resident said: “There was a time when I used to spend two to two and a half hours driving from my home in Ajman to my office in Jebel Ali. I used to spend over Dh750 on fuel alone.”
He has now moved closer to his office and saves both time and fuel, he said.
Major issues

“Lack of availability of power connection in many buildings and poor quality of water are major issues here,” a resident, who asked not to be named said.

The building he resides runs on a generator, he said, adding that this arrangement is not uncommon.

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