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29 March 2024

Sharjah real estate prices to drop further

Rents are likely to drop in Sharjah... again. (FILE)

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By Staff

Lease and occupancy rates in Sharjah will further decline with the addition of 37,000 square metres of office space and 7000 residential units, according to CB Richard Ellis (CBRE).
 
“The sheer volume of these new real estate offerings is expected to further drive down leases and occupancy rates, against the continued backdrop of weak demand and heightened competition,” Matthew Green, Head of Research & Consultancy UAE, CBRE, said in a report.
 
Ajman too witnessed a substantial increase in residential stock over the past year, from within both freehold and non-freehold areas. This includes the completion of Horizon Towers and Al Khor Towers. As new supply has come on line, achievable lease rates have dropped away sharply. Average one bedroom rental units are currently leased at Dh22,000 per unit per annum, as compared to Dh38,000 in the first half 2008, a decline of 42 per cent.
 
Umm Al Quwain has seen a 39 per cent drop since the market peak in 2008, while Ras Al Khaimah and Fujairah have fallen by 28 per cent and 23 per cent, respectively. The lower level of decline in some Emirates has been due to lower levels of development activity and delays in the completion of units.

Lease rates across the Northern Emirates have dropped considerably over the past eighteen months, and now range between AED344 to 970/sqm/annum, dependant on the location and view. The highest achieved rates can typically be found in dedicated office building along the corniche area in Sharjah. However, even here started to dip within some of the more established commercial towers. This is viewed as a direct result of increasingly price-sensitive occupiers and heightened levels of competition in the market.

The Emirates of Ajman and Ras Al Khaimah have more recently started to deliver true office space, including the Atrium 360 Business Tower in Ajman and the RAK Amenity Centre in RAK
Al Khaimah. Both of which offer significantly better quality office accommodation than has previously been available.

According to CBRE, the quality of existing infrastructure in the Northern Emirates is a key concern for residents and businesses, and remains arguably the single largest challenge for the real estate sector as a whole.
 
However, with around 17.5 per cent (Dh4.6 billion) of the Federal Budget currently understood to be allocated to development of infrastructure projects in the UAE, it is hoped that some of the ongoing power and traffic congestion issues will be eradicated.