Shaikh Zayed Road units elusive no more

Most major cities in the world have one particular strip of road, a main thoroughfare, so to speak, which is considered the city's lifeline. It could be the business hub where most major banks, corporate entities and firms have their head offices.

Real estate here is invariably Grade A and generally the city's most expensive. Often, these streets may even have residential real estate and retail options, and both just as highly priced.

For Dubai, this elite strip of road can be none other than Shaikh Zayed Road. It is the place to be for offices and residences alike.

Shaikh Zayed Road has numerous offices of all types and sizes, but for the average Dubai resident, contemplating living along this stretch has always been way too pricey. However, things have changed over the last three years across Dubai, with rents and sale prices declining substantially.

Rents fell by around 40 to 50 per cent between 2008 and 2010, slowing to around 5 per cent year-on-year in 2011. Negotiating power has shifted from the landlord to the tenant and 13- to 14-month contracts, four to 12 cheque payments, and rent-free periods have become the norm.

With rents in the whole of Dubai softening, the elusive apartments along Shaikh Zayed Road have also gotten less beyond reach. Rents have more or less halved since their peaks in 2008, making living along this thoroughfare affordable.

Take for example, an old, but popular building on Defence Roundabout. Rents for a two-bedroom apartment reached Dh120,000 in 2008, but the same units are now priced at a mere Dh45,000. This is the rent for a 100 square metre unit, with a Burj Khalifa view.

Also, new tenants are getting units that are completely renovated and refurbished with brand new flooring, bathroom accessories and kitchen cabinets.

A tower close to Dusit Dubai is another example where rents have declined substantially. Quoted at Dh70,000 for a two-bedroom unit, rents have declined by 40 per cent since its high of Dh120,000.

Buildings close to Mazaya Centre and Villa Rotana provide more examples. In 2008, two-bedroom units were leased for between Dh120,000 and Dh140,000. The same units are now being offered for at a negotiable rent of Dh65,000 with the option of paying in four cheques.

Rents for three-bedroom units have faced an even greater decline, falling by around 65 per cent from around Dh210,000 to Dh75,000. While these buildings look worn out on the outside compared to the shining Business Bay and Downtown blocks, the apartments are huge and amenities include basement parking, pools, a gym and sauna facilities.

Also, being a few hundred metres away from the Business Bay Metro station makes this an extremely desirable destination for the average Dubai resident.

The same trend has been witnessed at all locations on Shaikh Zayed Road for all asset types. Having said that, 2012 is often predicted to be a year when rents will stop the freefall, with quality locations with Metro access on Shaikh Zayed Road being the first ones to see rents stabilising.

Whether this comes true or not depends on a number of factors such as upcoming supply and generation of new jobs. But now is probably your best chance to live on Dubai's most exclusive stretch of asphalt.

The writer is the head of valuations and research at Chesterton International.