Downward movement in the rental market in the Northern Emirates, especially in Sharjah, has seen apartment rates fall by an average of 6% over the last three months, reversing the static trend of the previous two quarters, according to the Northern Emirates Q2 2012 report from leading UAE property management company, Asteco.
A combination of increasing vacancy rates in certain areas and the introduction of stricter tenancy rules in the emirate were cited as the main reasons for the decline, after a positive start to the year.
“New regulations regarding shared accommodation have been introduced with tenants in Sharjah required to disclose their salaries and confirm that people living together are family members only. Subsequently, we have seen tenants who previously shared accommodation, move independently to more affordable smaller units, prompting a decline in rental rates,” said Elaine Jones, CEO, Asteco Property Management.
Buildings along Mina Road and in Al Yarmouk, which were previously at the top end of the rental market, have seen the largest drops at 21% and 12% respectively for all unit types. The large amount of vacant units in the area, coupled with a lack of parking and facilities has seen residents seek better value for money elsewhere in the emirate.
The commuter belt of Al Khan (Mamzar) and Al Nahdah faired better, with only a 1% drop, while the more desirable Corniche area, which has the highest rents in Sharjah ranging from AED22,000 - AED54,000 for studios to three-bedroom units, saw a marginal gain of 2%. Elsewhere in the emirate, rents for a three-bedroom apartment ranged between AED28,000 and AED63,000.
The Sharjah villa market reported little change quarter-on-quarter, with rental rates for three-bedroom properties in Al Khan (Mamzar), Shargan and Al Quz remaining in the AED 70,000-77,500 bracket.
Neighbouring Ajman also saw a slight downturn in Q2 2012 with decreases in apartment rental rates for studio and one-bedroom units, particularly in the Al Naimia area and new buildings on the Corniche. While there was no change in rental rates along major - thoroughfares such as Sheikh Khalifa Road, Al Quds and Al Nakheel in Q2, both Sheikh Hamid Road and Corniche Road rents fell by an average of 6%.
“Ongoing issues with utility connections, especially those in new buildings, is still a major issue for prospective tenants who are placing generator-powered buildings firmly at the bottom of their housing wish lists,” said Jones.
The apartment market in the other Northern Emirates, namely Umm Al Quwain and Fujairah, have seen little or no movement in rental levels in the last quarter, while Ras Al Khaimah saw a slight dip in Q1 but began to stabilise by the end of Q2.
Transaction volume in the Sharjah office market followed Q1 trends with limited movement and rents remained static across the major commercial hubs, with the exception of Al Wahdah, which dropped by 5% to AED 484 per square metre. The Corniche area is still commercial market leader at AED 592 per square metre, mirroring the popularity of the residential rental market.