Dubai residents on the move to suburbs
With rents stabilising, moving activity is brisk in Dubai and neighbouring emirates, writes Deepthi Nair
For most expatriates in Dubai, shifting homes upon the expiry of a rental lease is a momentous decision and one that is driven by various factors. The most commonly cited factor is an increase in rents.
Take, for instance, the results of an online survey of 200 Dubai residents conducted by Movesouq.com, a comparison site for home services: 82 per cent experienced an increase in rents when they last renewed their rental contracts.
“Upon a closer look, we found that the rate of increase that Dubai residents faced in the last three months has decreased to less than 10 per cent, compared to late last year where a majority of tenants faced over 15 per cent increase in rent. This indicates that the rental market has stabilised in recent months,” says Bana Shomali, managing partner and head of operations, Movesouq.com.
Despite the rate of rent increase slowing down in Dubai in the first quarter and continuing into the second quarter of 2015, families are still moving homes. This could either be to a different emirate, within a community or to a locality close by.
It is common knowledge that several tenants still pay below-par market rates for their rental accommodation in Dubai. When landlords hike rents to bring them on par with the Real Estate Regulatory Authority (Rera) Rental Index, it becomes unaffordable for some tenants, who then move to localities suited to their budget.
“The decrease in rental growth has made some of the upscale communities worth a consideration to some residents, who are now considering a move out. This trend has also made larger spaces like three+ bedroom apartments, villas and townhouses affordable to some tenants and they have jumped at the opportunity,” explains Haider Ali Khan, CEO, Bayut.com, a property website.
Reasons for shifting
Other reasons why families and individuals switch houses include job change, longer commuting hours, traffic bottlenecks, construction-related noise, change of children’s schools, issues with landlords, lack of public transportation and growing families.
So, where are people moving to? According to a report by Movesouq.com and FlatReviews.com, a portal that reviews apartments in Dubai, the most in-demand areas based on moving activity are Dubai Marina, Dubailand, Jumeirah Village Circle (JVC), Business Bay and Downtown Dubai, which made up 31 per cent of all moving in activity in the first three months of 2015.
“Downtown, Jumeirah Lakes Towers (JLT) and Dubai Marina continue to experience a lot of moving activity, both move-in and move-out, which is a similar trend to 2014. In Q1 2015, we saw a growing rate of Dubai residents moving into newly developed areas, such as Dubailand, Jumeirah Village Triangle (JVT) and JVC. We have also noticed that once people live in a certain popular community, they tend to stay or move close by,” informs Shomali.
According to the report, the highest rated communities in Dubai are Motor City, The Greens, Shaikh Zayed Road, DIFC, Jumeirah and Arabian Ranches. The scores are based on categories such as traffic, access to nearby facilities (e.g. schools and shops), and value for money. Motor City emerged top because it ranked in the top five for traffic, pet-friendliness, walking possibilities, nearby schools/kindergartens and shops/restaurants, and value for money. The lowest rated community is International City.
While Dubai Marina did not figure among the top rated communities in Dubai, it witnessed robust moving in activity. This indicates that people will continue to live in communities such as Dubai Marina and Downtown Dubai for lifestyle reasons.
However, cost-conscious tenants are increasingly flocking to far-flung communities of Dubailand, Dubai Sports City, Jumeirah Village, International Media Production Zone (IMPZ) and International City in search of lower rents.
“We also have observed a surge in Bur Dubai’s popularity, which remains a preferred choice for many Indians, Pakistanis and Bangladeshis — who make up the majority of the expat population in Dubai — for its affordability and a community lifestyle reminiscent of South Asian living,” adds Khan.
While steep rents have prompted several families to shift to a different emirate, property experts claim that a lot of movement has happened within Dubai communities or localities close by.
The most common reasons for moving to a different emirate are a more affordable lifestyle or a job change. “The moves within a locality have primarily been driven by better rents or more square footage for the same price. The moves to different communities have been driven by other factors like children’s school, need for a larger space, wanting to live in a gated community, not wanting to be in a high-rise and more family-friendly communities,” says Bayut.com’s Khan.
Moving homes tends to peak before the start of an academic year or after a holiday.
“There is a strong correlation between moving requests and holidays. People tend to move at the beginning of the New Year [right after the winter holidays], and it peaks again before the summer holidays,” says Shomali.
“A lot of children have to change schools by the end of an academic year. They may get admission in a better institution or it’s merely moving from a primary to a secondary school. If the commutes become more distant, families look for accommodation that save them commuting time. Also families flying in to the UAE for work like to line up their leases with children’s academic years to avoid them arriving in the emirate in the middle of an educational year, finding no admissions and losing time,” explains Khan.
Who will live in 25,000 new apartments?
Talk is rampant that 25,000 new residential units will be added into the Dubai market by the end of 2015.
A majority of these units are going to be delivered in Dubailand, Dubai Marina, Dubai Sports City, Business Bay and Jumeirah Village Circle. Jebel Ali, Meydan and Umm Suqeim are also seeing several project launches.
“If developers do indeed deliver these on time, the fresh entries will put pressure on existing units and will force the rate of rental growth to slow down. Given a choice, most tenants would opt for a new dwelling over an existing one. This, in turn, will push the landlords to offer concessions in order to make their units more attractive,” says Haider Ali Khan, CEO of Bayut.com.
However, pockets of stability are likely to emerge. “Desirable areas, like Dubai Marina, will be not be as affected and even somewhat immune to this phenomenon. The more established communities, like Dubai Marina and Downtown, will always be a hotspot for investors and extremely desirable locations for tenants. It wouldn’t be surprising to see the rents go up in these localities,” Khan adds.
Meanwhile, reports claim that the Dubai government issued more than 200,000 job visas in Q1 2015. “If the quarterly trend persists, supply will be easily absorbed by an increased demand for accommodation of all types,” he reckons.
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