Dubai’s market dynamics are now prompting a slowing down of growth figures and could herald a softening in demand for competitively-priced residential rental units in the Northern Emirates as Dubai market conditions continue to adjust, said a report.

Nevertheless, the third quarter witnessed a prolongation of the positive trend seen over the last 12 months, with quarter-on-quarter increases of two per cent in Sharjah, five per cent in Ras Al Khaimah, four per cent in Ajman and six per cent in Umm Al Quwain, according to leading real estate company Asteco.

The trend for Dubai residents to search for more affordable accommodation in neighbouring Emirates appears to be slowing down despite a positive third quarter performance for the Northern Emirates real estate market, it stated.

"Real estate market values in Sharjah and the other Northern Emirates are largely dictated by what is happening in neighbouring Dubai, and with rental rates in some of its more affordable communities softening further still in the third quarter, this inevitably has a ripple effect across the Northern Emirates,” remarked John Stevens, the managing director at Asteco.

“This is an indicator therefore that rental rates in the Northern Emirates could be reaching their peak, with the distinct possibility of a slowdown or even reversal in the number of relocations in the medium term as residents opt to return to Dubai to avoid battling the daily commuter grind,” he added.

"Interestingly, lower rental rates in Ajman, Umm Al Quwain, plus older stock in Ras Al Khaimah, edged out Sharjah to record more promising growth levels of four per cent, six per cent and five per cent respectively, stated Stevens.

“This proves that uber 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,” he added.

According to Asteco, Ajman rentals are also on the rise but for a different reason with several on-hold projects resuming construction, such as the Ajman Pearl, where 2,448 units are expected to be delivered in 2015.

"Another boost for the emirate and a project that is certain to raise its profile, is the Al Zorah master plan project from Lebanon’s Solidère Group. This development is now under construction and with its high-end luxury positioning will add a new dimension to the emirate’s existing real estate landscape, targeting regional and international buyers," said Stevens.

The 5.4-million sq-m development will feature luxury villas, resort hotels, serviced apartments and apartment complexes in a landscaped and golfing environment surrounding the Ajman waterfront and mangroves.

The Ajman government is also taking steps to improve the property market and tourism sector by allocating 40 per cent of its fiscal budget to new developments. These include a new airport project located in the Al Manama district, along with work in progress on seaports as part of Ajman’s 2021 strategy.

A two-bedroom apartment in Ajman or Fujairah can currently be rented for anywhere between Dh30,000 to 50,000 ($81,65 to $13,609) against an average of Dh23,000 to 65,000 ($6260 to $17,695) in Sharjah, (excluding the prime areas such The Corniche area).

In Umm Al Quwain a two-bed unit averages at Dh30,000 ($81,65) while Ras Al Khaimah with its dual proposition of regular accommodation and attractive master planned community options, is priced as low as Dh28,000 ($7,621) and can go up to Dh70,000 ($19,025) .

Back in Sharjah, the most popular emirate for relocating Dubai residents, rental prices in certain neighbourhoods recorded above average growth in third quarter led by an eight per cent rise in Al Qasimiah, Abu Shagara and the ever-popular Corniche area.

One- and two-bedroom units in these three areas currently command nearly Dh55,000 ($14,970); Dh50,000 ($13,609) and Dh80,000 ($21,774) respectively.

Demand for office space in Sharjah flatlined for the second quarter running, with zero rental rate movement, said the report.-TradeArabia News Service