Rent for office space in Sharjah rose by up to 90 per cent last year – and is expected to climb by as much as 15 per cent in 2008.
Real estate agents, developers and market sources say the cause is a shortage in the emirate, which granted freehold licences for office space to UAE and GCC nationals four months ago. Obaid Al Tunaiji, owner of Al Tunaiji Real Estate, said the reason behind the reluctance of developers to invest in office buildings was the delay in the availability of electricity and water connections, which could take up to five years to arrive.
He also said the situation made several owners of residential buildings rent out their properties as office spaces to seek higher returns.
“There is a big demand for offices facing the lagoons in Sharjah, which is the reason behind the dramatic increase in prices in these areas,” Al Tunaiji said. He said that in 2006, the rent per square foot for an office ranged between Dh60 to Dh80, which climbed to Dh80 to Dh140 during 2007 – an increase of about 30 to 90 per cent.
The situation has prompted owners of old buildings at Al Wahda, Al Khan and Jamal Abdul Nasser streets and in Al Tawaun, Al Nahda and Al Buhaira areas to lease their premises as office spaces, since their buildings were initially licensed to serve as both commercial and residential properties.
However, after the implementation of a separate specification codes for residential and commercial buildings a few years ago, buildings marked residential are not allowed to serve as commercial, Al Tunaiji said. Dr Ibrahim Bash, CEO of Bawn Holding Investments, said in some areas rent of apartments has increased to Dh90,000 from Dh45,000 when leased as offices.
Dr Bash added the demand for office spaces, which has outstripped supply, caused a minimum increase in leasing prices of 30 per cent last year. “The situation may cause an estimated increase in office rents of 15 per cent in 2008,” he said.
Sharjah office rents soar by 90%