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Sharjah home rents see a marginal dip

Decline comes on back of rising supply, rent drop in Dubai.

Sharjah's residential property market has started to show signs of softening at the end of 2015 with average annual residential lease rates contracting for the first time in over two years, a report released on Monday said.
According to Cluttons' Sharjah 2015/2016 Winter Property Market Snapshot, residential rents during the third quarter stagnated and recorded a marginal 0.3 per cent increase, while year-on-year rents now stand at 1.6 per cent below this time last year, but demand still remains for high quality stock and gated community living.
Faisal Durrani, head of research at Cluttons, said 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. "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. At the same time, we are seeing reduced waiting lists for what is perceived to be lower quality stock."
The report highlights that new communities and gated villas have continued to outperform the wider residential market, particularly apartments, with rents rising by 4.1 per cent during the first nine months of 2015.
Suzanne Eveleigh, property management director at Cluttons, said Sharjah is experiencing a rise in the popularity of gated community living, and the relative affordability of Sharjah's villa communities is helping to sustain the steady level of tenant requirements.
The report highlights that this is in part due to developers focusing on this segment of the market, with the latest scheme to emerge being the Dh20 billion Sharjah Waterfront City, where 1,500 villas are planned.
Office market
In the commercial market, office rents across the city's main submarkets registered no change during third quarter, with the report referencing prime areas of Al Majaz (Dh75 psf) as remaining the city'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 Eveleigh.
The government is focused on diversification and also aligning developments to its master plan of shifting the industrial areas out of the city and further north.
"Sharjah remains the UAE's manufacturing nerve centre and the government's strategy to build on this will no doubt help to drive further economic growth in the emirate in the short to medium term, but clearly the current economic environment is challenging," said Durrani.
During the second quarter this year, rents in Sharjah fell three per cent quarter on quarter after a stable phase as Dubai became more reasonable for tenants.
According to Asteco, there are a few residential projects in the offing which could renew confidence in Sharjah's residential sector. These include Tilal City near Shaikh Mohammed bin Zayed Road offering for the first time land plots to expatriates on 100-year leasehold basis. The other one is Shoumous Residential Complex, the first of its kind in Sharjah which allows Arab buyers to make custom-built houses.
Analysts said as Sharjah works on the competitiveness of its property regulations, what could draw investors might be its renewed focus on tourism. Earlier this year, Sharjah Commerce and Tourism Development Authority announced a strategy to attract 10 million tourists by 2021, building on its cultural appeal to lure more visitors.
- issacjohn@khaleejtimes.com

Source: Cluttons, KT graphics

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