Mon, Dec 23, 2024 | Jumada al-Aakhirah 22, 1446 | DXB ktweather icon0°C

Why Dubai tenants who moved to other emirates are set to return in 2025

New apartments, villas are coming up in tier-2 neighbourhoods in the emirate

Published: Mon 23 Dec 2024, 6:00 AM

Updated: Mon 23 Dec 2024, 7:50 AM

Top Stories

Dubai's second-tier areas where many new properties are coming up in 2025 are set to attract a large number of residents from neighbouring emirates.

The migration from neighbouring emirates to Dubai will be driven by various factors — from heavy traffic resulting in commuters spending a lot of time on roads, as well as surge in rentals across Sharjah, Ajman and Abu Dhabi.

“In 2025, expectations around delivery in Dubai will be a bit higher than the norm in tier-2 areas like Jumeirah Village Circle (JVC), Arjan, Jumeirah Village Triangle (JVT), Sports City and Motor City, etc. This will attract many residents of other emirates into Dubai because new supplies will be plenty. They don’t have to travel between the emirates as they will have many more options in Dubai at very attractive rentals,” said Fawaz Sous, CEO of Octa Properties.

Fawaz Sous

Fawaz Sous

“I think the shift will happen from other emirates to Dubai, because whatever they're paying now in neighbouring emirates will also be available at nearly the same rate in Dubai due to the higher delivery rate of new units. I think rentals will relax a little bit in the second-tier areas,” Sous told Khaleej Times in an interview.

Due to the increase in traffic amidst the growing population, motorists spend up to three to four hours a day while commuting between Dubai and emirates like Sharjah and Ajman during the weekdays. But rising rentals in neighbouring emirates are not bringing relief to residents, prompting those working in Dubai to move back to save time lost in traffic. In addition, those who migrated to the Northern Emirates are also forced to return to Dubai amidst high rentals.

According to Asteco’s third-quarter 2024 data, a studio costs Dh20,000 per annum in International City compared to Dh18,000 in Sharjah’s high-end areas bordering Dubai and Dh17,000 in Ajman. This shows a marginal difference in rents, taking into consideration the cost of fuel and the time commuters spend on the roads.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

With higher new property supply coming in 2025, property prices and rentals in these areas are expected to soften next year in remote areas.

According to Asteco, over 40,700 units are scheduled to be delivered this year. Going into 2025, industry players say nearly 120,000 units are under construction.

Shift from old to new Dubai

However, he added that the shift from old Dubai to new Dubai happens all the time and it will continue next year as well.

“There is always a migration from very old Dubai communities into newer communities of the emirate. This is the normal trend.”

Born and raised in Dubai, Fawaz Sous has worked with UAE’s top real estate developers Emaar and Damac before venturing into launching his own company, which achieved Dh4.4 billion in sales so far this year. Octa Properties also set up two new entities as it expands its operations. Following co-developing a few projects, the company will also announce its first independent project soon.

Traditional drivers to lead

Sous expects traditional drivers such as safety and security, high capital appreciation, rental returns and lifestyle will continue to drive Dubai’s property market in 2025.

He noted that Dubai’s infrastructure is one of the main drivers as the emirate continued to develop its infrastructure even after the 2008-09 financial crisis, as well as during the pandemic.

“Dubai has continuously developed infrastructure even in a low market because that's a very smart thing to do. And it is not just roads and bridges infrastructure, but legal infra also, which is also very transparent. Anyone around the world could buy and sell without showing up in Dubai,” he added.

“I don’t see property prices in high-end areas dropping and they will continue to get business. Whenever a new resident comes to Dubai, he would always prefer to live in a central and fully developed location.”

No overheating

The CEO of Octa Properties has a positive approach to the local market but is also cautions as real estate is a cyclical business. After plunging during the 2008-09 financial crisis, Dubai property prices peaked in 2014. Prices plunged again during the pandemic year, but started to recover in 2021 and then the trend continued in 2024.

“Prices in Dubai peaked at the end of 2014. Today, we are probably 15 per cent above that peak. As long as pricing is controlled, I think the market is healthy. My only comfort is that although the market is 15-20 per cent above the peak of 2014, the value and the number of transactions have quadrupled compared to 2014. So when transactions quadruple, and prices go just 20 per cent above the peak, that's a very healthy sign. It's not something that the market should be scared of. If transactions were the same level as 2014 and prices went 20 per cent above the peak, that's an alert,” explained Sous.

ALSO READ:



Next Story