Muscat: Rents in Sharjah’s residential and commercial property markets have fallen for a second year in a row, increasing tenancy options in the emirate, according to real estate consultancy Cluttons.
The Cluttons Winter 2016/2017 Sharjah Property Market Snapshot highlights that for the residential rental market in particular, those who are willing to pay extra to upgrade, have more affordable options in Dubai, while tenants who are looking to get more for their money are moving towards Sharjah’s more spacious communities or the significantly more affordable community spaces in Ajman.
Sharjah’s residential rental market has been tracking the market in Dubai for almost two years now, with rates in Dubai down 8 per cent on this time last year. After dipping by 5.7 per cent in first quarter, residential rents in Sharjah fell by 2.5 per cent in second quarter and a further -4.7 per cent during third quarter, marking a year to date change of -7.1 per cent.
According to the Cluttons research, Sharjah’s landlords have been left with no choice but to lower rents in order to remain competitive to Dubai and Abu Dhabi. There has also been a marked decline in overall tenant requirements as tenants find themselves in the unique position of being spoilt for choice. Weaker jobs growth and the loss of tenants to Dubai has led to rising vacancy rates in Sharjah.
Suzanne Eveleigh, property management director at Cluttons explains, “Despite the ongoing correction, average rents in Sharjah are still 30 per cent higher than they were at the start of 2012, highlighting the strength of rent rises in recent years. Still, Sharjah’s rents remain at almost half the levels seen in Dubai or Abu Dhabi, with one bedroom flats in Sharjah rent for roughly Dh41,000 per annum, when compared to over Dh100,000 per annum in Dubai, or Abu Dhabi.”
Eveleigh adds, “On the other side, rents in Ajman are even lower than those of Sharjah with buildings of equally good quality and similar facility offerings. The key to winning back those who have migrated to the more affordable options in Ajman would be through offering flexible payment plans, in addition to better packages, including facilities such as parking.”
Faisal Durrani, Head of Research at Cluttons said, “The residential rental market has felt the impact of a falling market in Dubai and our expectation for a 10 per cent drop in average rents this year appears on track. While Dubai should see a reversal in the fortunes of its residential markets in the Autumn next year, any subsequent improvement in Sharjah, as has been the case historically, is likely to arrive shortly thereafter. Until we arrive at that tipping point, rents in Sharjah are likely to continue ebbing, with a further 5 per cent to 7 per cent fall next year before things stabilise.”
Undoubtedly Sharjah’s economy is feeling the pinch from the wider slowdown across the rest of the UAE, but demand for a slice of Sharjah’s emerging master-planned land market remains high and continues to exceed expectations.
Durrani added, “The game changer for Sharjah’s property market came in 2014 when property ownership laws were amended to allow all expats domiciled in the UAE to acquire property in designated areas, starting with Tilal City. 1,800 mixed use plots went on sale at the end of 2014 and while the majority of buyers have been Emirati. Purchasers from Syria, Pakistan, Palestine and Kuwait also feature prominently”.
Sharjah continues to surprise with its higher than expected profile amongst the region’s wealthy property investors as demonstrated by its third place ranking within the GCC, behind Dubai and Abu Dhabi, in our 2016 Middle East Private Capital Survey. Further property investment opportunities in the form of additional gated community developments point to a bright future for the emirate’s rapidly emerging property market profile. ”
Similar to the residential market, rents in the office market in Sharjah have been also dropping in an attempt to track commercial rents in Dubai.
Eveleigh explains that “With limited new supply and a relatively small office market, rents in Sharjah should remain resilient over the next six to twelve months, barring any major global economic shocks.”