Delivery of new supply in Dubai is putting pressure on Sharjah rents
The growth in supply of affordable properties in Dubai and flexibility by landlords on rental terms is exerting pressure on house rents in Sharjah. Tenants, who were earlier priced out of Dubai, can now consider moving back to the emirate. They are also upgrading to larger units, better quality or popular locations in Sharjah.
Apartment rents in Sharjah slipped by seven per cent in the first half of 2017 after an 8.1 per cent decline in 2016, according to real estate consultancy Cluttons.
“Apartment rents are expected to continue softening over the next six months, likely mirroring declines in Dubai of five per cent to seven per cent as landlords move to remain competitive. The decrease in prices has kept tenants interested and kept the number of enquiries for apartments at a sustained level, despite a number of companies downsizing their staff requirements,” said Suzanne Eveleigh, Cluttons’ head of Sharjah.
Rents in Al Nahda have lost the most ground, decreasing by 10.9 per cent between January and June 2017. However, in Al Nahda, the rate for one-bedroom flats has dropped by almost a fifth to stand at Dh38,000 per annum, while three-bedroom apartments (Dh70,000 per annum) registered growth.
Traditionally, apartments in Al Nahda, Rolla and areas around the Corniche have been popular among tenants.
“The continuous delivery of new supply in Dubai is putting pressure on existing Sharjah rents and forcing new landlords to offer incentives or discounts to encourage take-up. We are likely to see some relocations after the end of the school term. However, the Sharjah government is increasingly launching projects and initiatives to increase employment opportunities and attract long-term residents,” said John Stevens, managing director, Asteco.
Average residential rents in Sharjah fell by 5.5 per cent in the 12 months to 2017, according to Cluttons. However, villas in Sharjah have bucked this trend and recorded an 11.7 per cent rise in rents during the first six months of the year.
Cluttons estimates average villa rents in Sharjah at almost Dh112,000 per annum. They offer a definite cost advantage when compared to Dubai and Abu Dhabi, where average annual villa rents at the lower end of the spectrum stand at roughly Dh140,000 to Dh150,000.
“In the villa market, end-users are being lured to Sharjah by the value offered in some of its up-and-coming residential communities, where annual rents stand significantly lower than Dubai. Sharjah’s villa market remains relatively small and the demand being created by cost-conscious end-users looking for living environments on par with Dubai are ensuring that demand continues to increase,” said Faisal Durrani, head of research at Cluttons.
People, who live in Sharjah and work in Dubai, usually sacrifice a convenient travelling time for bigger sized rooms.
“People leave their one or two-bedroom apartments in Dubai and move into villas in Sharjah. People who move generally get to live in a different environment, different lifestyle and may be close to Corniche areas which is generally perfectly suited for families,” said Mansi Saxena, marketing director, SPF Realty.
Despite cheaper rents in Sharjah, there has not been a considerable movement of tenants from Dubai.
“This primarily depends on two factors: one being the preference of tenants who favour a lower commute time to work or their child’s school, and the second factor being the rents in Dubai are also decreasing day by day,” added SPF’s Saxena.
Tenants are spoilt for choice in Dubai’s competitive housing market today. According to Parvees Gafur, CEO of TrustWorthy, a Dubai-based real estate brokerage firm: “It is easier for tenants to find an apartment in Dubai within their budget and close to public transport such as the Metro and bus stations. Landlords offering incentives such as flexible payment terms or rent-free periods to contracts has encouraged people to consider Dubai as their foremost option.”
Article Source: Khaleej Times