Rental gap between Dubai and Abu Dhabi narrowing, say property agents

Take our poll: The Government's housing decree may be propping up house rents in Abu Dhabi, but the gap is narrowing due to the housing stock in Abu Dhabi and Dubai's recovery.

ABU DHABI // Staff moving to the capital from Dubai may find they save money.

Many live in Dubai for lower rents, but recently the gap between the two emirates has closed so much that when travelling costs are taken into account Abu Dhabi may be cheaper.

“The rental gap between Abu Dhabi and Dubai is narrowing, which, combined with improved quality, means Abu Dhabi now has more competitive offerings,” said property company Asteco.

“The market dynamics are fuelling demand for housing in the capital with newcomers to the emirate choosing to live in Abu Dhabi as opposed to commuting from Dubai.”

The new rules are “likely to lead to increased demand at the high end of the market,” the company said.

While properties still tend to be slightly more expensive in the capital, for those living in Dubai commuting costs quickly add up.

Someone buying Dh45 of petrol for a return journey and working 230 days a year after holidays and weekends are deducted, will spend more than Dh10,000 a year. And speeding fines are Dh600 in Dubai, double those in Abu Dhabi. These and other vehicles expenses can outweigh any marginal gains on rent.

However, it’s not all good news for the movers. There are significant costs in moving home. Dubai removals and storage company The Box said it would cost Dh2,800 to Dh3,800 to move the average three-bedroom household from Dubai to Abu Dhabi.

And despite new homes coming on to the market, landlords have continued to raise prices in Abu Dhabi’s newest residential areas.

Many of those affected by the decree had high expectations and low budgets, property agents said.

“Demand has gone up with this decree,” said Anita Susan Matthews of Quest property services in Abu Dhabi. “The majority can only get something less than what they had in Dubai for the same budget.”

Ms Matthews put rents at about 10 to 15 per cent higher than last year. Moin Hamdani, manager of Elysian Real Estate, and Elena Novikova, managing director of Real Estate Management, estimated the increase at closer to 20 per cent.

All agencies found that many employees opted for Reem Island to maintain similar living standards to those they enjoyed in Dubai, such as a gym, supermarket and pool.

“We are doing a lot of viewing,” Ms Matthews said. “There’s not much compared to the quality in Dubai.”

Another popular area is Al Raha. Although it is further outside Abu Dhabi island, it is more expensive.

Some Government employees have resorted to bending housing rules. Ms Mathews said some clients were seeking to buy Dh100,000 studios in Alghadeer, on the border of Abu Dhabi and Dubai. “People are looking at this option to show that they are living here,” she said. “If the kids are going to school in Dubai, it is not convenient to move the family.”

Mr Hamdani said others have asked to rent out cheap studios and have no plan to actually live in them.

Craig Plumb, the regional head of research for Jones Lang La Salle, said the move was beneficial to the Abu Dhabi market now but not in the long term.

“In the long term these sorts of regulations are artificial – it is more important to let the market find its own demand than allow artificial demand.”

He said about 20,000 to 40,000 homes were available for rent or sale in Abu Dhabi.

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