Sharjah rents have started to fall for the first time in more than two years.
Residential rents in the emirate declined 1.6 per cent year-on-year in the third quarter, the brokers Cluttons said in a report.
“Rising supply levels across many areas of Sharjah, coupled with price reductions in Dubai offering a shorter commute and increasing value for money in Ajman, are starting to undermine rents,” said Faisal Durrani, the head of research at Cluttons.
“However, well-managed buildings that are perceived to offer better quality and increased facilities still have longer waiting lists than lower-quality buildings and continue to drive demand.”
For example, a one-year lease for a three-bedroom villa in Sharjah is Dh90,000, while annual rents for a three-bedroom villa in Dubai starts at Dh125,000 a year and in Abu Dhabi for Dh174,000 a year.
Sharjah is not the only emirate where the property market is slowing. Dubai prices also continue to soften, with a revival in its fortunes unlikely to take place until at least the end of next year, Cluttons said last month. Overall prices for homes in Dubai have dropped by 3.5 per cent year-on-year in the third quarter.
Cluttons expects Dubai property prices to continue to fall by 3 per cent to 5 per cent next year because the amount of new stock coming on to the market continues to grow.
However, the rate of house price declines is slowing.
Residential lease rates for new communities and gated villas in Sharjah, though, continue to rise, with rents growing 4.1 per cent during the first nine months of this year.
“We’re experiencing a rise in the popularity of gated community living, and the relative affordability of Sharjah’s villa communities is helping sustain the steady level of tenant requirements,” said Suzanne Eveleigh, the property management director at Cluttons.
One such project is the Dh20 billion Sharjah Waterfront City, a mixed-use development by Sharjah Oasis Real Estate Development Company that will include 1,500 villas. The project will stretch across an area of 60 million square feet and phase one will be completed by the third quarter of 2018.
Sharjah office rents were unchanged in the third quarter, with the prime areas of Al Majaz remaining the emirate’s most expensive. “The ability of office rents to maintain their stability will very much depend on how the wider UAE economy fares in the face of the current global economic headwinds and the prolonged period of low oil prices,” said Ms Eveleigh.
The Sharjah Government’s economic diversification plans and efforts to attract regional and international small and medium-sized enterprises could help lift the property market.
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