Friday, September 18, 2009

Abu Dhabi's economic strength is Dubai's commercial gain

The dropping rental prices in Dubai offers much respite for expatriates, seeking to escape from the high prices in Abu Dhabi, and helps in luring back residents who had fled to the northern emirates in search of cheaper accommodation last year, reveal experts.

The economic strength of Abu Dhabi has come to Dubai's aid, not only at the federal level, but at residential level, too. Abu Dhabi's infrastructural development, high prices, coupled with shortage of supply, have all led to more people moving in to New Dubai, much to the commercial benefit of Dubai, says Mohammed Nimer, CEO, MAG Group Property Development.
Initially, the growing rental prices in Dubai had forced expats to move out to places like Ajman, Sharjah, and Ras Al Khaimah, but now, with the sharp fall in prices, they are tempted to come back, Nimer said.

Single bedroom apartments in the Jumeirah Lake Towers or Dubai Marina, are now renting out for Dh.60,000 to Dh.70,000, which is a distinct Dh.30,000 less than last year. Therefore, it is not surprising that these localities have become more appealing to mid-income budget groups.

Meanwhile, the Leasing sales still continue to tick in Dubai. The Director-Commercial Division at Better Homes, David Macadam, revealed that the company has seen 400 leases in Dubai in May, compared to 200 to 300 per month in 2008. One-third of these are new entries from Europe, UK and the US, who were mostly mid-level managers, while another one-third were from outside emirates and a third were residents who were shifting internally with drop in prices.

Most important, the real estate sector in Dubai is showing strong signs about residential sales gaining momentum, and is drawing more genuine buyers, rather than speculators of previous years.

However, in the opinion of Nimer, the general picture will be lot clear after Ramadan. At present, Dubai and Abu Dhabi has gained momentum, although there are few projects that stuttered in recent months, although the ripple effect will be felt mostly in the outlying Emirates.

Even in the northern emirates, it is clear that several projects are being radically modified owing to investor worries surrounding power supplies. The projects are met with uncertainty, and these cannot fall back on leases with real confidence, while there are negotiable rents in several areas of Dubai, Nimer concluded.

Established in 1978, the MAG Group has grown into a multinational organization with 18 offices in eight countries including Middle East, Asia and Europe.

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