Sharjah recorded a 3 per cent quarter-on-quarter drop in residential rents in the second quarter of 2015 mainly due to a reverse relocation trend to Dubai, a new report by consultancy Asteco has said.
The drop in rental rates was also prompted by a rise in vacancy levels as new supply was handed over.
Tenants can currently rent a two-bedroom apartment on the Sharjah Corniche for between Dhs 48,000 to Dhs 80,000 per annum, Asteco said.
The reverse relocation trend to Dubai has started to gain momentum since rents in the emirate have remained fairly stable this year.
A surge in affordable housing projects in Dubai has also caused a drop in property sales in Sharjah, the report added.
“Sharjah’s sales market has opened up in recent months, however, except for land plots at Tilal City that were priced in line with market demand, few properties have actually been sold due to the high asking prices, which failed to match buyer expectations,” said Asteco’s managing director John Stevens.
“The lack of activity was further compounded by a wave of affordable project launches in neighbouring Dubai, which diverted prospective buyer interest.
“Where Sharjah is also losing out is that Dubai’s more established real estate market has more transparent pro-buyer legislation in place,” he added.
However, the report stated that there could be renewed confidence in the long term potential of Sharjah’s residential sales market with the imminent relaunch of land sales at the Shoumous Residential Complex.
Located on the Sharjah-Kalba Road, the project targets GCC and Arab nationals and was initially launched following the success of plot sales within the Tilal City master planned development.
Tilal City, a Dhs 2.4bn mixed-use project, is Sharjah’s first master planned community. Along with residential and retail elements, it will feature schools, an upscale mall, mosques, healthcare facilities and jogging and bicycle tracks.
Another project currently under development in the emirate is the 45,470 sqm Al Noor Island. The development will feature a natural butterfly habitat housing over 500 species, a 3,500 metre walkway and floating bridge serving as an entrance to the island, a literature pavilion, children’s playground, and an egg-shaped art sculpture.
According to the Sharjah Investment & Development Authority, it is expected to be handed over at the end of 2015.
The project is expected to increase awareness of the emirate and its market potential, which Asteco says will potentially drive rates higher in central Sharjah areas, especially along the Corniche.
“The northern emirates real estate market closely follows the Dubai market, with a few months delay between recovery and periods of stabilisation,” said Stevens.
“So new project announcements and the timetabled completion of developments such as Al Noor Island are vital elements in securing investor interest and confidence in the months to come.”