Rents in Sharjah remained stable in the first quarter 2015, driven by tenants ‘re-migrating’ to Dubai, or opting for Ajman, which offers 'value for money', says a new Cluttons report.
“The ensuing impact of this rapidly changing market dynamic has caused rental growth in Sharjah to stall, with little or no growth being registered in the first quarter 2015 across all the city’s major sub-markets,” the real estate consultancy said in its ‘Spring 2015 Property Market Outlook’.
Annualised rental value growth reached 26.4 per cent at the end of third quarter 2014, with the first three quarters registering between five and 10 per cent increases.
Growth slowed to mere 0.5 in the fourth quarter 2014 with the slowdown attributed to the dampening rate of increases in Dubai leading to reverse migration or moving to the more-affordable Ajman.
“This has almost halved the annual rate of growth to just under 12 per cent.
“This slowdown is likely to persist this year and we expect increased downward pressure on rents, with slight declines projected over the course of 2015,” the report added.
Emirates 24|7 analysis, however, of asking rates for one-bedroom apartments in Corniche and Al Majaz – two prime areas - revealed that rents have increased by up to 20 per cent in the past six months.
Read: Sharjah rents rise... but no commission; up to 6-cheque payment
The report said “premium” renters were willing to pay higher rents to secure properties with high quality finishing, views, facilities, etc.
Citing an example of Al Qasba Canal area, it said three-bedroom apartments were rented for between Dh110,000 and Dh115,000 per annum, compared with the current average of Dh75,750 pa for three-bed units, a premium of 52 per cent.
Tenants were back in the driver’s seat, with many using the weaker demand as an opportunity to negotiate for little or no increase in rents at renewal, the report said.
“Most landlords are succumbing to the risk of a void period and leaving rents unchanged at renewal. Furthermore, with a growing awareness amongst tenants of their right not to have a rental uplift for three years under Sharjah Municipality rules, landlords are not willing to risk a loss of income by getting tied up in litigation on any irregular rent rises,” the consultancy added.
Referring to an official rent index, Cluttons said the index would give the market a greater sense of freedom and encourage other investors to step in to the buy-to-let market.
“This would remove the constraint of income levels being effectively frozen for three years under current rules,” it stated.