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Apartment rents in Sharjah, northern Emirates to fall further

Apartment rents in Sharjah, northern Emirates to fall further

Apartment rents in Sharjah, northern Emirates to fall further

They are being impacted by supply coming up in neighbouring Dubai

Sharjah apartment rents across various locations decreased by 1 per cent on average in Q1 2018 and by 12 per cent year on year.

Residential rents in Sharjah and other Northern Emirates posted an annual decline of 11 per cent on average in Q1, with the most significant drop recorded in the Rolla area in Sharjah and for high-end units in Ajman, estimates real estate consultancy Asteco.

Sharjah apartment rents across various locations decreased by 1 per cent on average in Q1 2018 and by 12 per cent year on year.

“The rate of rental decline marginally slowed from 3 per cent in Q4 2017 to 1 per cent in Q1 2018 as there was a general slowdown at the beginning of the year. Landlords and tenants adopted a wait-and-see approach mainly to see the impact of uncertainties on the UAE – such as the VAT effect, oil price stabilisation and global economic recovery,” John Stevens, managing director of Asteco, told Khaleej Times.

The most significant quarterly drop of 4 per cent was recorded in Rolla. This was because “the area is crowded, isn’t family friendly and predominantly comprises old buildings, so landlords need to offer discounts to retain tenants or increase take-up,” added Stevens.

Rents remained unchanged over the quarter in areas such as Abu Shagara, Al Butina, Al Yarmook and Al Wahda. Annually, rents fell by 14 per cent in Al Wahda, 13 per cent in Abu Shagara, 9 per cent in both Rolla and Al Yarmook, and 7 per cent in Al Butina.

Stevens added: “We expect a further pressure on apartment rents as recovery rates in the Northern Emirates are directly impacted by the delivery of supply in Dubai.”

Some tenants are taking advantage of the rent reductions and upgrading from apartments to villas or to better quality and larger units. “Many also remain cautious or are waiting for further reductions. People are also moving from older to newer buildings as they often include parking and facilities which are charged extra or are non-existent in mature buildings. The Al Nahda area has seen increased uptake due to the delivery of new supply which resulted in rent reductions,” Stevens pointed out.

While no major residential projects were delivered in Q1 2018, Sharjah expects additional residential supply on completion of Nasma Residences Phase 1 and Al Zahia Residences, both due for handover by end-2018.

Meanwhile, apartment rents across the Northern Emirates witnessed an average decrease of 1 per cent since Q4 2017. Studios to 3-bedroom apartments in Sharjah and Umm Al Quwain reported a decline of 1 per cent over the quarter, while over the course of the year, rents dipped by 10 per cent to 13 per cent and 11 per cent to 12 per cent respectively.

In Ajman, rents for affordable housing units fell by 1 per cent in Q1 2018 and by 12 per cent year on year. High-end inventory saw a drop of 3 per cent over the quarter and 11 per cent between Q1 2017 and Q1 2018.

Studios to 3-bedroom apartments in Ras Al Khaimah and Fujairah recorded declines of 1 per cent over the quarter, and over the course of the year, rents dipped by 10 per cent and 13 per cent respectively for affordable housing units. Meanwhile, high-end units reported an annual decrease of 8 per cent in Ras Al Khaimah and 10 per cent in Fujairah.

Stevens added: “The launch of residential developments is on the rise in the Northern Emirates, with projects spanning a total of over 100 million square feet of land area scheduled for completion by 2025 in Sharjah alone.”

In the Northern Emirates, government priorities remained geared towards infrastructure development, says the report. In addition, more master plan and/or large-scale developments are starting to materialise.

Stevens said: “The recently implemented legislation that allows non-Arab nationals without a UAE residence visa to purchase properties in Sharjah on a 100-year renewable lease is expected to stimulate demand and ultimately increase foreign investment in the real estate market. In addition, continued efforts to develop the private sector and emphasis on diversification strategies are anticipated to strengthen the economy and shape a favourable environment for job creation, business growth and investment.”

Filed on May 2, 2018 | Last updated on May 2, 2018 at 11.15 pm
Khaleej Times

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