Northern Emirates rental rates up again in Q3
Q3 2014 quarter-on-quarter increases of 2% in Sharjah, 5% in Ras Al Khaimah, 4% in Ajman and 6% in Umm Al Quwain - rental growth rates set to top out as relocation demand from Dubai reduces
The trend for Dubai residents to search for more affordable accommodation in neighbouring Emirates appears to be slowing down despite a positive Q3 2014 performance for the Northern Emirates real estate market.
According to the latest Northern Emirates market report from Asteco, Dubai’s market dynamics are now prompting a slowing down of growth figures and could herald a softening in demand for competitively-priced residential rental units in the Northern Emirates as Dubai market conditions continue to adjust.
Nevertheless, Q3 2014 witnessed a prolongation of the positive trend seen over the last 12 months, with quarter-on-quarter increases of 2% in Sharjah, 5% in Ras Al Khaimah, 4% in Ajman and 6% in Umm Al Quwain.
“Real estate market values in Sharjah and the other Northern Emirates are largely dictated by what is happening in neighbouring Dubai, and with rental rates in some of its more affordable communities softening further still in Q3, this inevitably has a ripple effect across the Northern Emirates,” said John Stevens, managing director, Asteco.
“This is an indicator therefore that rental rates in the Northern Emirates could be reaching their peak, with the distinct possibility of a slowdown or even reversal in the number of relocations in the medium term as residents opt to return to Dubai to avoid battling the daily commuter grind,” he added.
Lower rental rates in Ajman, Umm Al Quwain, plus older stock in Ras Al Khaimah, edged out Sharjah to record more promising growth levels of 4%, 6% and 5% respectively.
“This proves that uber budget-conscious residents are still willing to trade Emirates and location convenience for cheaper alternatives that offer potential rental savings that are up to two or three times lower than equivalent units in Dubai’s most affordable communities,” remarked Stevens.
Ajman is also on the rise, but for a different reason, with several on-hold projects resuming construction, such as the Ajman Pearl, where 2,448 units are expected to be delivered in 2015.
“Another boost for the Emirate, and a project that is certain to raise its profile, is the Al Zorah master plan project from Lebanon’s Solidère Group. This development is now under construction and with its high-end luxury positioning will add a new dimension to the Emirate’s existing real estate landscape, targeting regional and international buyers,” said Stevens.
The 5.4mn m2 development will feature luxury villas, resort hotels, serviced apartments and apartment complexes in a landscaped and golfing environment surrounding the Ajman waterfront and mangroves.
The Ajman government is also taking steps to improve the property market and tourism sector by allocating 40% of its fiscal budget to new developments. These include a new airport project located in the Al Manama district, along with work in progress on seaports as part of Ajman’s 2021 strategy.
A two-bedroom apartment in Ajman or Fujairah can currently be rented for anywhere between AED30-50,000 against an average of AED23-65,000 in Sharjah, (excluding the prime areas such The Corniche area).
In Umm Al Quwain a two-bed unit averages at between AED27-30,000, while Ras Al Khaimah, with its dual proposition of regular accommodation and attractive master planned community options, is priced as low as AED28,000 up to AED70,000.
Back in Sharjah, the most popular emirate for relocating Dubai residents, rental prices in certain neighbourhoods recorded above average growth in Q3 2014 led by an 8% rise in Al Qasimiah, Abu Shagara and the ever-popular Corniche area. One and two-bedroom units in these three areas currently command from AED40,000 to AED55,000; AED40,000 to AED50,000; and AED50,000 to AED80,000 respectively.
Demand for office space in Sharjah flatlined for the second quarter running, with zero rental rate movement.