Surging demand for affordable staff housing from Dubai-based companies has pushed up Sharjah’s rents, a new report has found.
According to real estate consultancy Cluttons, rents in Sharjah rose by 17 per cent within the first half of this year, after rising 16 per cent in 2013. Rental rates grew 5.7 per cent in the second quarter alone, following a 10.8 per cent rise in Q1.
Sharjah has also been benefiting from a steady stream of residents who are priced out of Dubai, keeping the rental rates high.
“The emirate is enjoying a continuous stream of requirements stemming from its own economic rejuvenation,” the report said.
“The steady number of tenant requirements comes against a backdrop of a relatively limited supply pipeline, which helped to drive rents up.”
Cluttons noted that the rents of the villas were higher compared to the apartments due to a weak supply pipeline and a limited villa stock.
Developers are also cashing in on the high rental rates as they launch new residential properties across the emirate.
Multiple apartment blocks have been launched in King Faisal Street in Al Majaz area while many master planned communities are being planned on the outskirts of the city, the report noted.
However, fresh supply in the market is not expected to drive down rents.
“Despite the strengthening supply pipeline, we do not forecast the upturn in fresh stock to dent the rate of rental value growth. This is primarily due to the exceptionally strong underlying demand,” Cluttons said.
“Furthermore, the most critical component to unlocking any new supply is the ability of developers to secure utility connections through SEWA, which can easily stall the handover of schemes by six to 12 months, thereby inadvertently stemming any surplus flows of fresh residential stock.”
Sharjah has also seen a rise in rent disputes after the steep hike in rental rates in the first half of this year.
“As the year progresses, we expect the spike in complaints to persist, as the growth in rents is not expected to ease in the near term,” the report said.
“Despite this, our expectation is to see tenants opting to remain in their current accommodation, rather than relocating in order to contain costs, suggesting the market is likely to remain in favour of landlords in the near to medium term.”