Dubai: Thinking of renting an apartment at a location near a Dubai Metro station in JLT or at the fast emerging residential hub of Al Furjan?
If yes, be prepared to pay up to 30 per cent or higher for options right next to these stations compared to rents for units slightly away from them. In a property market where rent gains are getting steeper, the Dubai Metro is having its own effect on residential rents in and around the same areas. Now, the rental gap could widen further.
Since its commissioning, the metro was always a factor in determining demand and property values/rents at locations near stations across the network. What’s been happening now is that how close a building or community is to those stations is exerting its own influence on how much landlords can ask for, according to a new report from Reidin-GCP.
Al Furjan’s two-bedroom apartments now carry rental demands of Dh80,000 and over, depending on the building’s location vis-a-vis a station, with units at recently completed buildings pushing the asking rate close to Dh100,000.
“Rents nearer to the metro are consistently higher, both where the line is a relatively new feature (in Al Furjan) and where a station has been present for a significant enough period for prices to normalize (Jumeirah Lake Towers).”
In JLT, two-bedroom options straddle a wide range, with listings showing anything from Dh105,000 to Dh180,000.
According to leasing agents, post-Eid should see some major movements in Dubai’s rental space, as leases come up for renewals that factor in the revised RERA Rental Index average rates. “Even without the changes to the RERA index, rent increases are trending towards double-digit hikes,” said an agent handling apartments in Dubai Marina and Business Bay.
“What will happen in the coming weeks is more tenants having to decide whether they stick with a renewal or they are better off looking to a new part of the city for accommodation.”
The fact is there aren’t too many ‘priced-right’ sort of rental options becoming available. New residents are still making their home in the city, and there are multiple instances of a new tenant paying more on a one- or two-bedroom unit than what an existing tenant is paying on a two- or three-bedroom apartment – in the same building.
‘Metro effect’ in upmarket locations
When it comes to areas such as Dubai Marina or Downtown, it’s less immaterial whether the rented apartment is bang near the station or not. In the former, the rental difference on a two-bedroom unit is only 3 per cent, while at the Downtown, the gap is around 6 per cent. Over at Business Bay too, the difference between right next to the metro station and further away is only 3 per cent. (All three locations have had across the board rental increases of 30 per cent in these three years.)
Selling prices and the Metro
With all the rental action close to Metro stations, one would have thought selling prices too of such units would have heading much higher.
In fact, recent transaction data suggest that owners of apartments at such buildings are more keen to hold on rather than sell. A sizeable number of these owners could be end-users, or they may be waiting for values to perk up further before cashing out.
“Apartment buildings further from the metro station tended to have higher sales velocities than those closer,” says the Reidin-GCP report. “This implies proximity to the metro lowers willingness to sell - and a trend indiscernible from sales price data.
“This also generally holds true in JLT - apartment buildings further from the metro
generally tend to see higher turnover rates among occupants almost across the board every year going back to 2019.”
So, the metro effect is playing out differently in the Dubai property market, depending on whether the intent is to buy or rent...
