Dubai’s cooling property market is set to slow demand for accommodation in the Northern Emirates, despite rent rises reported during the three months to September, according to research from the real estate agents Asteco.
Four of the five Northern Emirates experienced single-digit rent rises during the third quarter in line with upward trends of the past 12 months, with rates unchanged in Fujairah.
However, the recent decline in rents in more affordable areas of Dubai, such as International City and Discovery Gardens, means that rents in the Northern Emirates may be approaching their peak as cost- conscious renters turn their attention back towards Dubai.
“Real estate market values in Sharjah and the other Northern Emirates are largely dictated by what is happening in neighbouring Dubai,” said John Stevens, Asteco’s managing director.
The broker reported last week that both rents and purchase prices in Dubai had fallen during the third quarter of the year, the first time that has happened since 2012.
“With rental rates in some of [Dubai’s] more affordable communities softening further still in Q3, this inevitably has a ripple effect across the Northern Emirates,” he said. “This is an indicator therefore that rental rates in the Northern Emirates could be reaching their peak.”
A lower base in Umm Al Quwain and Ajman made them the two best growth markets for the third quarter, recording rental increases of 6 and 4 per cent respectively.
Ras Al Khaimah rents increased 4 per cent during the quarter, while rents in Sharjah increased rose a mere 2 per cent.
“This proves that 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,” said Mr Stevens.
Ajman this year began to displace Sharjah as the emirate of choice for those looking for value accommodation, following rapid price increases in Sharjah earlier in the year.
The government of Ajman has recently taken steps to boost its property and tourism sectors by allocating 40 per cent of its fiscal budget to new developments.
These include an airport project located in the Al Manama district of the emirate, along with work in progress on seaports as part of Ajman’s 2021 strategy.
Several on-hold projects in the emirate have also resumed construction.
jeverington@thenational.ae
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