Apartment and villa rental rates in Sharjah declined by an average of 5% and 4% respectively, in the third quarter of this year as low demand, the summer and tenants relocating to newer buildings with better facilities, took their toll, according to the latest Asteco Q3 2011 report released today.
“With a combination of summer holidays and Ramadan which culminated in low demand putting pressure on landlords, tenants relocated for better rents and/or terms, causing apartment leasing rates in Sharjah to fall by 5% on average and up to 10% in the case of Abu Shghara,” commented and Elaine Jones, CEO, Asteco Property Management.
The ripple effect of relocation and affordability also prompted tenant migration to the neighbouring emirate of Dubai. This ongoing trend is consistent with the decline in rental rates in certain areas of Dubai, said the report.
Landlords, aware of these trends and mindful as more supply prepares to come to market, are increasingly offering incentives to attract or retain tenants, including 14-month lease terms, with 12 installments and no commission payments.
Villa rental rates declined by 4% in Q3 2011 for the same or similar reasons that caused apartment rents to soften.
Bureaucracy or rather the lack of it and convenience were incentive enough for some Sharjah office tenants to relocate to Dubai, where property and registration paperwork is considerably less than in Sharjah. Other businesses relocated within Sharjah to new developments in more popular areas. The bottom-line was an average drop of 6% in office rents since Q2 2011.
In the northern emirates of Ajman, Fujairah, Ras Al Khaimah and Umm Al Quwain, overall rates remained stable. However increasing supply is now coming to market, one such example is Falcon Towers in Ajman, comprising 840 apartments spread over seven residential towers and one office tower. Overall however, demand is still low with many residents in the more northern emirates, still preferring to relocate to a more affordable Sharjah.
Rental rates particularly in Fujairah and Ras Al Khaimah will come under renewed pressure as new residential developments are now in the process of being handed-over. This will have an adverse effect on rates in the near term especially in the more mature projects, said the report.