Almost all key areas in Sharjah and Ajman recorded year-on-year declines in average sales and rents across apartments and villas in the first six months of 2018, according to dubizzle Property's Northern Emirates report, published on Sunday.
This is a result of more stock entering the Sharjah market, making it more competitive. The dip in rents could also be attributed to more affordable stock coming to the market in Dubai, making tenants migrate from neighbouring emirates. Landlords are also seen increasingly open to negotiate with tenants and drop rents rather than keep units empty.
"Across the UAE, properties are becoming more affordable, resulting in a decline in the cost of living. We are seeing an oversupply of property units in the market right now which has created a more competitive and affordable market," says Samer Abdin, general manager at dubizzle Property.
Sharjah experienced a decrease in rents across most key areas. Al Nahda and Al Khan experienced the biggest drops, with a decrease of 16 per cent from H1 2017, followed by Al Taawun, which saw a 14 per cent drop, and Muwailih Commercial where rents are down by 2 per cent, according to dubizzle Property.
"With rents becoming more affordable in different emirates across the UAE, especially in Dubai, residents can now look into properties closer to/more convenient to their workplaces. Another reason could be an oversupply of units in the mid-market segment in other areas of Sharjah, which has led to a decline in these three prime areas, giving property seekers a range of options to choose from," observed Matthew Gregory, head of property sales at dubizzle.
Two-bedroom rental apartments in Al Nahda saw the largest decline, dropping 20 per cent, putting the average cost for a two-bed at Dh36,000.
Sales prices of apartments in Sharjah were more mixed. The Al Khan area saw a slight increase in average sale price by 4 per cent, while other key areas experienced a drop in prices. Sale prices in Al Majaz fell by 19 per cent, while Al Nahda decreased 9 per cent and Al Taawun saw a fall of 4 per cent, according to dubizzle Property.
Al Nahda, Muwailih Commercial and Al Taawun were the most popular areas for both sale and rent in Sharjah.
Cost of Living in UAE Continues to Drop Due to Rents Fall
Why It's Better to Rent out Your Unit as a Holiday Home
Meanwhile, Ajman witnessed a similar decline in rental and sales prices, with some properties falling at a greater rate than Sharjah, dubizzle said.
Al Jurf and Ajman industrial area saw the largest drop in rents in 2018, with a decline of 18 per cent from 2017. This is followed by Al Sawan with a 14 per cent decrease and Emirates City, where prices have dropped by 10 per cent.
"Apartment sale prices in Ajman in particular have fallen at a more pronounced rate than rents," added Abdin.
Apartments in Al Nuaimiya saw the biggest drop in average sales prices, at 23 per cent, according to the report, followed by Emirates City (21 per cent) and Al Mushairef (19 per cent). Al Sawan experienced the lowest decline in average sale price, dropping by only 10 per cent.
"We expect that affordability and falling rents will be a trend that we will continue to see for the rest of the year as more and more new units continue to feed oversupply in the market. However, we are slowly beginning to see restored confidence in the real estate market beginning to creep in as oil prices stabilise, helped by the governments' recent initiatives such as the introduction of REST, which is expected to boost transparency and efficiency of transactions, particularly for overseas investors, and the promise of 10-year visas in the UAE, which had an immediate impact on the property market, pleasing both investors and developers," added Gregory.
By Deepthi Nair
Copyright © 2019 Khaleej Times. All Rights Reserved.