Apartment rentals remained flat across the Northern Emirates in the second quarter of 2010, however, prices in Sharjah and Ajman dropped by as much as 8% as an increase in supply allowed tenants more choice, according to a new report by Asteco Property Management.
The Asteco Northern Emirates Q2 2010 report published today (18 July), revealed that studios in Sharjah continued to out-perform other residential offerings as rents remained the same in the second quarter as the first with prices between Dh16,000 and Dh24,000 per annum. But it was a different story for one- two- and three-bedroom apartments, as prices fell eight, four and 6% respectively. Yet the emirate's worst performing rental units were villas, which saw prices drop an average of 12%.
"One of the major factors underlying Sharjah's rental adjustment is the amount of supply coming to the market. However, we have witnessed over the last few months that there is some interest in these areas as some towers have completed providing tenants with low rents, larger properties and better facilities," said the report.
"Conversely the three bedroom villa market has seen rents drop at a much steeper pace over the last three months. The rental rate for a typical three bedroom apartment has put downward pressure on the villa market, particularly given the variances in accessibility, quality and value for money."
In comparison, there are interesting times ahead in Ajman, Ras Al Khaimah, Umm Al Quwain and Fujairah as prices continued to fall at rates similar to the first quarter in most areas in the three months to the end of June, according to the report.
"[Rents for three-bedroom] apartments on [Ajman] Corniche have dropped by 12% compared with 7% in Q1. Despite this, the area continues to attract interest from people working in the emirate, although the market is competitive and landlords, especially private landlords, are offering incentives and dropping their prices to secure occupancy," it added, reporting that three-bedroom units now command Dh45,000 per annum.
But going forward, developers in Ajman are aiming to build confidence in the real estate market by introducing construction-linked payment schedules.
Commenting on this, Elaine Jones, CEO, Asteco Property Management, said: "Although the last three months have not seen any improvements in the real estate market, the Northern Emirates various government departments are striving to ensure a better regulatory environment and planning on new ways to stimulate demand."
On the commercial front in Sharjah, office rents also saw a slight price decline in the second quarter from Dh40-75 per square foot to Dh40-70 per square foot but the tourism master-plan currently being devised by the Government is expected to have a positive impact on prices for all asset classes. However, the past three months have not been so positive with utility problems severely hampering the city's appeal.
"Utility connection issues continue to be the primary problem in the Northern Emirates, affecting many households and businesses. The Sharjah office market continues to show rental rate decreases with an average reduction of 6% in the last three months, similar to the previous quarter," said the report.