Asteco says availability of cheaper homes in Dubai is having a negative effect on Sharjah, RAK, Ajman
The increase in affordable housing in Dubai is having a negative effect on rents in the Northern Emirates, according to real estate consultancy Asteco.
Its Northern Emirates Real Estate Report Q4 2016 revealed average rent levels declined marginally during the fourth quarter of last year, with Sharjah, Ajman and Fujairah witnessing decreases of 1 percent 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.”
The report said that over 2016, apartment rents in Sharjah fell 3 percent, on average, with a typical one-bedroom apartment renting for around AED31,000 per annum.
Asteco said this was not helped by the Sharjah Municipality’s decision to increase the rent attestation fee from 2 percent to 4 percent of the annual rent, which resulted in a reduced number of tenant relocations and upgrades within the emirate.
It added that 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 ones.
Apartment rates in Ras Al Khaimah fell, on average, by a nominal 1 percent year-on-year, although there was a 2 percent 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.
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 percent year-on-year, with a typical one-bedroom property now renting at AED31,000 per annum. Rents in Umm Al Quwain were unchanged year-on-year from 2015, the report added.
The commercial sector in Sharjah remained flat throughout 2016 due to a lack of demand for office space.
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.”