Apartment rental slide in Northern Emirates slows down in second quarter

Decline in apartment rental slowed to 12 per cent in the second quarter against a steep fall of 25 per cent in the first quarter across the whole of the Northern Emirates, according to a new report.

Sharjah and Ajman recorded decrease of 17 per cent and 16 per cent, respectively, against a decline of 15 per cent and 11 per cent, respectively, in the first quarter. Although the rents decline was greater than the rest of the Northern Emirates, they have not decreased to the same degree, Asteco said in its second-quarter report on the Northern Emirates.

When comparing the rental percentage decrease figures for this quarter against those for the first quarter, the real estate consultancy said there has been a reversal of fortunes as far as each emirate's position is concerned. Last quarter, Umm Al Quwain, Fujairah and Ras Al Khaimah saw the highest rental rate decreases of 29 per cent, 26 per cent and 23 per cent, respectively. This quarter, the decline has slowed considerably with percentages of nine, eight and 11 per cent, respectively, said the report.

Sharjah continued to be the most expensive among Northern Emirates, due primarily to its proximity to Dubai and the many facilities and amenities currently on offer. The average rental rate for an apartment, across the board, is Dh39,000 – a 17 per cent decrease during the past three months. Still, the decrease quarter-on-quarter remains positive for landlords as the gap has narrowed by two per cent.

For the second time running, Ajman is the next most expensive emirate for apartment rentals in the Northern Emirates, with the average rental rate for an apartment reaching nearly Dh35,500.

Ras Al Khaimah is not far behind with average rental rates, for all unit mixes, at Dh35,125. It is interesting to note that there is not great difference in rental rates for studio apartments between the two emirates as both average between Dh20,000 and Dh24,000.

The Sharjah apartment rental market decreased in the past three months by nearly 17 per cent. The main areas affected are Al Nahda, Al Khan and the Corniche, with the two former locations witnessing a significant supply of new residential apartments, and many more under construction.

Rolla recorded the largest rental rate decrease for studio apartments in Sharjah. A studio in Rolla currently commands average rental rates of Dh23,500, down from Dh30,000, which equates to a 22 per cent drop. This is largely due to the number of people moving out of this area to neighbouring areas. "We are not necessarily seeing tenants move to cheaper units; on the contrary, tenants are looking for properties with better facilities and parking. Al Qasemeh recorded the smallest decrease of 13 per cent for studios, with current rental rates averaging Dh26,000."

"In fact, our records show that the studio apartment market has reached second quarter 2007 levels, where an average studio commanded rental rates between Dh22,000 and Dh26,800," said the report.

Al Nadha and Al Khan command the highest rental rates averaging Dh44,000 per annum across the board. Al Yarmouk continues to provide the most affordable housing in Sharjah.



Sharjah villas

Villas overall have fared better than apartments with decreases averaging 14 per cent, similar to first-quarter results. Four-bedroom villas saw the smallest decline of 10 per cent, with average villa prices at Dh126,600. Five-bedroom-plus villas have seen the highest drop of 16 per cent, with prices ranging from Dh130,000 to Dh180,000.

"In our first-quarter report, we noted that there was a demand for villas. We believe that this is still the case; however, we feel that with property prices dropping for all types of residence, tenants will find larger apartments more attractive than villas." For example, a three-bedroom apartment ranges from Dh46,800 to Dh61,600, while a three-bedroom villa can command rental rates between Dh90,000 and Dh110,000, a saving of more than Dh40,000 per year. Villas do, however, have positive attributes such as spacious living areas, gardens, better parking facilities, and access is usually less congested.



Sharjah office space

Asteco reported in the first quarter that the office market witnessed the largest decrease in property rental rates due to companies curbing their spending. "Over the past three months we have observed similar levels of decline with rental rates ranging from Dh50 per square foot for offices with basic or no amenities in less desirable locations."

Office units in prime locations such as Al Taawun and the Corniche are commanding rental rates from Dh70 up to Dh90 per sq ft. Landlords continue to offer attractive terms with flexible payment schedules and grace periods in order to help companies conduct their business at an affordable level, said the report.

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