Dubai: The abundance of high quality residential stock at affordable rentals is resulting in considerable tenant movement across Dubai. Lifestyle communities such as Downtown Dubai, Palm Jumeirah and Jumeirah Islands are much sought-after and remain resilient to the precipitous rental free fall as they are well-established and offer occupants many conveniences.
However, apartments in International City, Al Barsha and Mirdif are experiencing high vacancy rates as tenants move to affordable precincts such as Discovery Gardens and Jumeirah Lakes Towers (JLT). "The sheer number of apartments available in these areas as well as the availability of equally affordable units with better facilities in more desirable locations elsewhere is causing the exodus," says Vineet Kumar, head of leasing and sales, Dubai, Asteco. However, fringe areas like International City are also drawing on demand from tenants upgrading from the northern emirates. "Tenant migration from Abu Dhabi and the northern emirates is still prevalent, primarily to areas such as Discovery Gardens, Al Qusais and International City, but has slowed down slightly towards the end of 2010 due to increased supply and reduced rental rates in the other emirates," he adds. Other areas that attract tenants from outside Dubai include Oud Metha, Shaikh Zayed Road and Jumeirah.
The large inventory of one- and two- bedroom units in Dubai has helped studios remain relatively immune to the rental decline. "Studios are usually occupied by single occupants who choose the unit based on accessibility and proximity to work or retail, and tenants are less likely to move due to the relatively high moving costs. Additionally, people who have previously shared accommodation are now in a position to [be able to] afford to move into a studio, thus further fuelling demand," explains Kumar. Meanwhile, there has been a readjustment in the rents of three-bedroom units as tenants are upgrading to townhouses and villas.
Jumeirah Islands too has been attracting a considerable number of tenants. "The infrastructure within Jumeirah Islands is complete, but ongoing construction in Jumeirah Park might be considered a nuisance. However, it is the size of these villas, low density in terms of unit numbers and the fact that it is well connected to the main business and leisure areas of Dubai which sets it apart from other villa developments," he adds.
Homeowner view
- Apartments in Al Barsha, Mirdif and International City are mostly vacant
- Oud Metha and Jumeirah are attracting tenants from outside Dubai
