The trend for Dubai residents to search for more affordable accommodation in neighbouring Northern Emirates appears to be slowing down, according to a new report by Asteco.
The real estate consultants said that a slowdown in Dubai's market is resulting in a softening in demand for competitively-priced residential rental units in the Northern Emirates.
Nevertheless, Asteco said the third quarter of 2014 witnessed a prolongation of the positive trend seen over the last 12 months in the Northern Emirates, with quarter-on-quarter increases of 2 percent in Sharjah, 5 percent in Ras Al Khaimah, 4 percent in Ajman and 6 percent in Umm Al Quwain.
"Real estate market values in Sharjah and the other Northern Emirates are largely dictated by what is happening in neighbouring Dubai, and with rental rates in some of its more affordable communities softening further still in Q3, this inevitably has a ripple effect across the Northern Emirates," said John Stevens, managing director, Asteco.
"This is an indicator therefore that rental rates in the Northern Emirates could be reaching their peak, with the distinct possibility of a slowdown or even reversal in the number of relocations in the medium term as residents opt to return to Dubai to avoid battling the daily commuter grind," he added.
The report showed that lower rental rates in Ajman, Umm Al Quwain, plus older stock in Ras Al Khaimah, edged out Sharjah to record more promising growth levels of 4 percent, 6 percent and 5 percent respectively.
Stevens said: "This proves that uber budget-conscious residents are still willing to trade emirates and location convenience for cheaper alternatives that offer potential rental savings that are up to two or three times lower than equivalent units in Dubai's most affordable communities."
Asteco said Ajman is on the rise but for a different reason with several on-hold projects resuming construction, such as the Ajman Pearl, where 2,448 units are expected to be delivered in 2015, and the Al Zorah master plan project from Lebanon's Solidère Group.
The Ajman government is also taking steps to improve the property market and tourism sector by allocating 40 percent of its fiscal budget to new developments. These include a new airport project along with work in progress on seaports as part of Ajman's 2021 strategy.
Asteco said a two-bedroom apartment in Ajman or Fujairah can currently be rented for anywhere between AED30-50,000 ($8,168 - $13,613) against an average of AED 23-65,000 in Sharjah.
In Umm Al Quwain a two-bed unit averages at between AED27-30,000 while Ras Al Khaimah is priced as low as AED28,000 up to AED70,000.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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