Residential rents in Sharjah fell by 1.6 per cent year-on-year during the third quarter of this year, owing to new supply and increasing affordability in selected areas of Dubai, a new report has found.
This is the first decline in average annual residential lease rates in the last two years.
According to the Winter Property market report issued by real estate agency Cluttons, rents also declined marginally by 0.3 per cent quarter – on- quarter in Q3.
“Rising supply levels across many areas of Sharjah, coupled with price reductions in Dubai offering a shorter commute and increasing value for money in Ajman are starting to undermine rents,” said Cluttons’ head of research Faisal Durrani.
“However, well-managed buildings that are perceived to offer better quality and increased facilities still have longer waiting lists than lower quality buildings and continue to drive demand. At the same time we are seeing reduced waiting lists for what is perceived to be lower quality stock.”
But despite an overall softening in the market, Sharjah’s new housing stock and gated communities saw continued demand.
Cluttons noted that rents in new communities and gated villas rose by 4.1 per cent during the first nine months of 2015.
Sharjah has seen a flurry of new project launches over the last few months, following a move by the government relaxing rules for foreign investors to buy properties.
One of the major projects taking shape in Sharjah is the Dhs 2.4bn Al Tilal City, a mixed-use development consisting of schools, mosques and a mega mall. Tilal Properties – a joint venture between the emirate’s investment arm Sharjah Asset Management and Eskan Real Estate Development – is developing the 25 million square foot project.
Another mega project, Sharjah Waterfront City was launched this year and is slated to become the emirate’s largest mixed-use development. The project is estimated to cost a total of Dhs 20bn to build and will comprise 200 residential and commercial towers, 95 apartment buildings, a hotel and a hotel apartment tower. It will also include up to 1,500 waterfront villas and a Crystal Lagoon theme park.
The Dhs 700m Al Rayyan development, comprising of two residential towers, a commercial tower and a retail complex was also launched last year, adding to the supply in the market.