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Dubai rent fall sparks influx of tenants - industry
The sharp drop in rents seen across Dubai in recent months has sparked an influx of people from other emirates, as well as major population shifts within the emirate itself, according to property experts on Sunday.
Former residents of Sharjah are now upgrading to International City, while those living in the Marina are securing villas in Jumeriah, said Jesse Downs, Director of Research and Advisory Services, Landmark Advisory.
"We are seeing major population shifts from other emirates to Dubai as well as different areas within Dubai. This is primarily due to individuals looking to upgrade in terms of quality, location and size of apartments and villas," she said in an interview with Emirates Business.
"Some of the patterns we are seeing now are massive shifts from Sharjah to International City and Discovery Gardens as well as from International City and Discovery Gardens to the Marina.
“We're also seeing individuals previously living in places like the Marina upgrading to villas in Jumeirah and Emirates Living," Downs revealed.
As prices fall further more people from Abu Dhabi are expected to take up homes in Dubai, which are far higher in quality, and commute to work, she said.
The rental price of a one bedroom apartment in central Abu Dhbai was going for better AED120,000 to AED80,000 per year, the same price as a two-to-three-bedroom apartment in Dubai Marina and Jumeirah Beach Residence.
"In Abu Dhabi quality is an issue as many of those new projects are not yet delivered, leaving the majority of current stock in older buildings.”
“For the same rates, it's possible to rent high quality, recently built or three-to-four-bedroom villas in Emirates Living or Jumeirah/Umm Sequim," she said.
While some were taking advantage of lower rents to upgrade others were moving to save money in preparation for tougher times ahead, added Camilla Van der Merwe, Head of Leasing, Asteco Property Management.
"We have seen movement in the market not only because the household income has reduced, but mainly because the steps tenants are taking are merely preventative measures and a cost-saving initiative," said Merwe.
Last year a family living in a two-bedroom apartment in Dubai Marina would have paid on average AED150,000 per year, now they can rent a two-bedroom villa in Arabian Ranches for AED130,000.
“The benefits are that there is a bigger living area, larger outdoor area and savings of around Dh10,000 if you choose the Arabian Ranches option," said Merwe.
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Comments 1-10 of 10
Posted by WHAT, Dubai on 3 May 2009 at 12:34 UAE time
If anybody signs a contract for increased rents it must be because he is too lazy to move house!!
Posted by Nirosha Hettige, shj, UAE on 29 April 2009 at 20:40 UAE time
if the rents are coming down in Dubai why is that In Sharjah the rents are increasing !! its crazy... specially during this difficult times. I dont see the lands lords or the banks who own the properties doing anything, specially the Islamic Bank in Shj does not care of the people, nor do they maintain the apartments, its just cheating the people.
Posted by Serg, Sharjah, UAE on 29 April 2009 at 17:14 UAE time
last year I had to come from Dubai to Sharjah because very big rent increase in Dubai. But after a week I will shift back because my 2BR flat in Sharjah is 60K & found 1BR in Jumeirah for 55K only. I have office in Dubai & going morning time is a headache. Changing 2BR to 1BR is not an excellent option, but I save some money & save too much driving time.
Posted by John Gill on 29 April 2009 at 09:33 UAE time
Agreed with all the comments about RERA's index being a complete joke. Although I see rents coming down in areas like JBR and Marina, which were hugely oversupplied and where prices are finally starting to reflect that, my own rent was increased by 20% during the worst recession in 50 years or so because of RERA's ridiculous index, which was always skewed towards the benefit of landlords. They seemed to think that simply forcing prices to stay within certain artificially high (peak-2008 levels) bands would prop up the real estate market. Hilarious.
Even if you feel rents are 'low', it's probably only because you haven't been here that long. Not too long ago (i.e. in the '00s), people would have balked at rents in Sheikh Zayed Road for a 3-bedroom apartment (a spacious one at that) costing over 100k a year!
Posted by Punam, Dubai, uae on 29 April 2009 at 07:41 UAE time
I stay in Dubai, in two bed room apartment. The rent of my apartment is increased 20% on renewal this month.
Posted by Sand Jockey, Dubai on 28 April 2009 at 06:40 UAE time
Winston Churchill said it best - "Statistics are like a drunk with a lampost: used more for support than illumination."
I can take any number and put a spin on it and that's what we see here. Folks trying to make a dire situation look rosy.
I've not doubt that there are folks who have moved "up" as I have friends who have done it. Yet I also have friends who have made the move in the other direction. Palm to Arabian Ranches, Arabian Ranches to Marina, Arabian Ranches to Umm Al Qwain are all realities but kept quiet.
Are there folks moving? Yep. Are the rents falling? Yep. Is it going to help most people? Not unless RERA gets off the stick and publishes a REALITY based index. Having all these so called industry experts spout off does nothing as most intelligent folks won't even listen to them.
There has been at least one good thing come out of this though. Landlords are now footing the bill for the real estate agent's commission. Maybe we will finally see reality come to this market.
SJ
Posted by ANU, dubai, uae on 27 April 2009 at 17:48 UAE time
An Expert is one who gives an UNBIASED OPINION. These reports are only trying to drive the market which the world over knows is falling daily or even hourly.
Let us just read these EXPERT REPORTS and FORGET IT. Nothing more needs to be said.
Posted by Mallik, Dubai, UAE on 27 April 2009 at 14:45 UAE time
The expert commentator,has not known the realities of the market. They all sit in the office and offer comments. There is no exodus from Sharjah to Dubai, due to myth of rents falling !! There is no change in rental situation in Dubai. Landlords are keep increasing rents, nobody planning to reduce it. This is just rumours circulating in parties and coffee lounges. If you come in the market and do a survey, you can see it.
Posted by paul, Dubai, UAE on 27 April 2009 at 10:44 UAE time
There will always remain a differential between Dubai and Sharjah. So if Dubai prices collapse, then Sharjah prices must collapse similarly in order to stop an exodus of people heading to Dubai. Similarly AD's real estate market is now being forced down by cheap competition from Dubai.
None of this will stop Dubai prices falling imminently, the majority of those in Sharjah will stay put and enjoy the cheaper rents rather than 'upgrade' to Dubai. Similarly, many Dubai residents in 1-2 bed apartments will rather sit tight and pocket the savings in uncertain times rather than move to a 5 bed villa on the palm.
Posted by UK, Dubai, UAE on 27 April 2009 at 09:34 UAE time
Though rents are falling across the board, rent of my apartment in Qusais increased thanks to RERA's index issued last year. Moving to other areas was not an option due children's school in the vicinity. RERA should have come out with a new index to reflect the reality as planned in April OR made the old index null and void. I feel terrible to shell out more rent, when I know they are dropping everywhere. Another issue RERA must address on top priority is provision to pre-close a contract considering interests of both tenant and landlord. The present one is considering only the interests of the landlord.