Low-cost housing sinks rents in Northern Emirates
Average rent levels declined marginally during Q4 2016 in Sharjah, Ajman, Umm Al Quwain, and Fujairah
The influx of newer units and affordable housing has triggered the fall of rents in the Northern Emirates, according to the latest report from real estate consultancy, Asteco.
The Northern Emirates Real Estate Report Q4 2016 said that average rent levels declined marginally during Q4 2016 in the Northern Emirates, with Sharjah, Ajman, and Fujairah witnessing decreases of 1% on average.
John Stevens, managing director, Asteco, said: “We could see further declines in 2017, if the supply of affordable property, continues to stifle demand in the Northern Emirates.
“Sharjah and Ajman are expected to experience more downward pressure on rates in comparison to Ras Al Khaimah and Umm Al Quwain.”
Over the year, in 2016, apartment rents in Sharjah fell 3%, on average, with a typical one-bedroom apartment renting for approximately $8,440 (AED31,000) per annum, said the report.
The Sharjah Municipality’s decision in Q3 2016, to increase the rent attestation fee from 2% to 4% of the annual rent, has resulted in a reduced number of tenant relocations and upgrades within the emirate.
“However, to arrest the slide, landlords in Sharjah have offered rent-free periods and more flexible payment plans – six to 12 cheques – in order to retain existing tenants and attract new renters.
“For example, the newly completed Sahara Tower offered rent-free periods in order to increase occupancy levels,” added Stevens.
Apartment rates in Ras Al Khaimah fell, on average, by a nominal 1% year-on-year, although there was a 2% increase in master planned communities such as Al Hamra Village and Mina Al Arab, which outperformed mature apartment units due to enhanced product offerings and facilities.
On a cautionary note, Stevens said: “With the handover of more than 1,400 apartment units on Al Marjan Island, rental rates are expected to decline as better quality options will become available to tenants.”
Apartment rents in Ajman, on average, fell by 2% year-on-year, with a typical one-bedroom property now renting at $8,440 (AED31,000).
Rents in Umm Al Quwain were unchanged year-on-year from 2015.
Meanwhile, the commercial sector in Sharjah remained flat throughout 2016 due to a lack of demand for office space.
Rental rates in the newly handed over Al Marzouqi Tower decreased from $17.7 (AED65) per square feet to $15 (AED55) per square feet.
This was in addition to rent-free periods of up to three months offered by the landlord to encourage take-up, the report stated.
Stevens said: “The Sharjah commercial market is expected to remain stable or, in some areas, show marginal rate declines during 2017 due to new supply combined with lacklustre demand for office space.
“On the other hand, the retail market in Sharjah and Ajman is expected to witness improvements with the handover of new supply such as Ajman City Centre, various retail outlets at Al Majaz Waterfront, and Zero 6 Mall.”