(MENAFN- Khaleej Times) With rents in Sharjah falling, tenants who are looking to get more for their money seem to be moving towards the emirate and Ajman while those who are willing to pay extra to upgrade their residences are finding more affordable options in Dubai.
In fact, Sharjah is offering increasing tenancy options as rents across its residential and commercial property market segments continued to fall for a second year in a row, real estate consultancy Cluttons said.
Tenants are getting more value for money at Sharjah's spacious communities or the significantly more affordable community spaces in Ajman, it said.
Sharjah's residential rental market has been tracking the market in Dubai for almost two years now, with rates in Dubai down eight 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 drop.
Sharjah's landlords have been left with no choice but to lower rents in order to remain competitive to Dubai and Abu Dhabi, according to the Cluttons research. 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 have led to rising vacancy rates in Sharjah.
Suzanne Eveleigh, Property Management Director at Cluttons, said 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."
"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," said Eveleigh.
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 five per cent to seven per cent fall next year before things stabilise."
Cluttons said 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.
"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. While1,800 mixed use plots went on sale at the end of 2014, the majority of buyers have been Emirati. Purchasers from Syria, Pakistan, Palestine and Kuwait also feature prominently," said Durrani.
Cluttons noted in its report that Sharjah continued 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."
Rents in the office market in Sharjah also have been also dropping in an attempt to track commercial rents in Dubai. Office rents have succumbed to pressure from falling rents in some of Dubai's most affordable submarkets such as Jumeirah Lake Towers, where rents start at Dh60 psf. Rents in prime areas of Al Majaz (Dh65 psf) have fallen by Dh10 psf between January and September, while rents in Al Soor (Dh60 psf) have held firm.
"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," said Eveleigh.
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Issac John Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.
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