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Rents in Northern Emirates seen falling after 20% H1 drop
Residential rents in the UAE’s Northern Emirates declined by 20 percent in the first half of the year and look set to keep falling in the second half, CB Richard Ellis (CBRE) has said.
Residential lease rates in Ajman, Ras Al Khaimah, Sharjah and Umm Al Quwain fell by an average of 20 percent in the first half, with some properties seeing drops of more than 35 percent, the commercial real estate consultancy said.
''With supply already well outstripping demand, tenants are likely to benefit from an increase in options while also being offered more favourable terms from landlords,'' CBRE said in the report.
Housing in the UAE’s Northern Emirates became popular with cost conscious occupiers during the second half of Dubai’s six-year property boom.
But as real estate prices have crashed, commuters are choosing to move back to Dubai at a time when supply in nearby emirates – particularly Ajman and Ras Al Khaimah – is rising sharply.
The Ajman government took an AED800m stake in the emirate’s beleaguered Marmooka City development in February this year in a bid to restore confidence in the project.
Similarly, the Ras Al Khaimah government has agreed to take over the AED2bn La Hoya Bay island property project.
Both emirates have formed regulatory bodies for the real estate sector modelled on Dubai’s RERA.
''It is feared that already declining market conditions for developers will worsen, at least in the short term and this could result in additional delays, cancellations or government intervention,'' CBRE said.
In May, the UAE government issued a decree granting foreigners the right to a six month renewable residency visa if they owned properties worth at least AED1m ($272,300).
The impact of the new regulations on the Ajman and Ras Al Khaimah property markets is not yet clear, but the value of most residential properties in Ajman is below AED1m, CBRE noted.
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Comments 1-9 of 9
Posted by santhakumar, abudhabi, indian on 4 August 2009 at 12:19 UAE time
it is very happy to hear this news.but the people who stays in abudhabi it is very difficult.in musaffah they are asking 90000 for one bed room. how the middle clss can survive.
Posted by Charles David on 4 August 2009 at 09:02 UAE time
Thank you to all that assisted me with my search (Mightie, Dubain). I pray for a favorable end result.
Posted by Mightie, Dubai, United Arab Emirates on 3 August 2009 at 17:10 UAE time
ARRA contact details:
Tel: +971 6 7444 144
Fax: +971 6 7444 145
Email: info@arra.ae
Web: www.arra.ae (under construction)
P.O.Box: 2333 Ajman
Office Address:
Al Ittihad Road, Old immigration Building,
B block, Ajman (same road as Lulu Hypermarket)
Posted by Dubian, Dubai, United Arab Emirates on 3 August 2009 at 14:15 UAE time
Charles, Ajman equivalent of RERA is called ARRA and their website is www.ARRA.ae but unfortunately its under construction.
I am also looking for a way to reach them so if anyone could help. ARRA has issued a few statements lately linking payments to escrow accounts etc but the developers do not seem to follow it.
Posted by jesus on 3 August 2009 at 09:17 UAE time
We own some properties in Ajman. our 2 bedroom flat was renting for 52 K lat year. i knew some people who were paying 67K for the same. Now we just had renew one of our tenants contracts. He is now paying 35 K. Lucky bugger.
But I'm genuienely happy about the rents coming down. It was just getting too silly.
Posted by Leo Soz, Dubai, UAE on 3 August 2009 at 09:15 UAE time
The increasing noise localization is certainly a politically correct policy, but the impact on UAE's progress and growth is already being seen. Recent indications that it is th eright time to reduce and cut out the expat flab is ill-timed and ill-placed. For a country which is still a long way on upward curve, it requires the manpower as well as the sheer weight created by the expact forces (also doubled as consumers fueling the local econonomy). The challenge of identity crisis for Emiratis has some metrit but this needs to prudently judged in the context of the infant economy and the increasingly globalised environment. If the hints of 'we don;t want expats' are followed up more vigorously, one can expect much higher rent drops, confidence erosion and lack of attractiveness as a stable investment destination. How do we differntiate between 'we want your cash' and 'we don't want you'.
Posted by Angelo, Oud Metha, United Arab Emirates on 3 August 2009 at 07:59 UAE time
There isn't much work in the Northern Emirates so why would People want to go there? Dubai has benfitted slightly from continued work opportunities in Abu Dhabi - cos they(Abu Dhabi) have very limited accomodation. The New ruling (6 month visa) has probably damaged the sales - especially if you are European where you can now buy reasonbley priced property in without any hassle and you can stay and still be entitled to your pension benefits - as has been stated on this site previously - who will buy when even if you own the property you dont own the land and have no rights should the land owner decide to demolish and rebuild.
Posted by Charles David on 3 August 2009 at 06:22 UAE time
Does anyone out there know the contact details of the Ajman equivalent to Dubai's RERA??? I am currently in the US, have purchased a property in Emirates City with Sapphire Properties, and they have yet to start construction. This was 1.5 years ago.
I have no confidence anymore, as the initial terms of the contract have been ignored. Are all contracts ignorable by the seller??? Are only the buyers bound to the original document???
If someone out there can direct me to the appropriate agency to get this rectified, I would be very grateful..........Maybe even a real estate lawyer, as a criminal case may be the answer, who knows???........
Posted by Tillerman, Vancouver, Canada on 3 August 2009 at 04:35 UAE time
Billing Says: "The impact of the new regulations on the Ajman and Ras Al Khaimah property markets is not yet clear..."
Oh, its very clear, those real estate markets are doomed beyond repair! Has anyone every driven out there and seen some of these developments (the ones that are being worked on, or stalled). You look at some of these mammoth projects, in the middle of no where and wonder, what were these people (buyers) thinking? Honestly, I feel sorry for whoever bought into these developments. I can tell you from industry knowledge, electricity will not be coming to these properties for some time to come (in some cases over 5 years).
Now factor in some of these ill-thought out (and dynamic) rules and policies and the formula gets exponentially worse. I'm especially referring to the1 mil DH rule, and then basically it will mean that no foreigners can own property in Aj, Rak, Uaq, etc. unless the rules change :) maybe it will work out in terms of a grand scheme to re-populate those emirates with locals.
All of those emirates and the development companies involved marketed their projects by piggy backing on the "Dubai Brand." It worked during the hype. Off plan crap was selling like hot cakes. Foreign investors bought without even going to the emirate, let alone the project site. I frequently traveled to Canada and USA during that time (06-08). My friends/associates would ask me about investing in UAE real estate markets, and they would show me some email/brochure about a property in Ajman, RAK, etc. I would ask them if they know where it is, their reply is "...well it is Dubai right?"
In one way, those people were tricked. However to me, it still is buyer beware. What gets me, is that when most of the people who invest in real estate or stock markets... if they were say to buy a used car for DH 40,000 they would see it, drive it, take a friend for his opinion, take it to a professional mechanic to get it checked out, maybe even the dealer, and spend some money, then maybe see it again, and take days or weeks to decide on the purchase, and then negotiate like it was a hostage situation (just to get 5% off). Now, that same person, might make in impulsive split second decision, without ANY due diligence to purchase real estate worth DH 2 mil !!
To conclude we know how badly Dubai is hurt from this, what do you make of the rest?