Asteco: Further Downward Pressure on Apartment Rental Across Sharjah, Northern Emirates

Asteco’s Northern Emirates Real Estate Report Q1 2018 has shown an annual decline in rental rates of 11% on average, with the most significant drop recorded in the Rolla area in Sharjah and for high-end units in Ajman.  

Apartment rental rates across the Northern Emirates witnessed an average decrease of 1% since Q4 2017. Studios to three-bedroom apartments in Sharjah and Umm Al Quwain reported a decline of 1% over the quarter, while over the course of the year, rentals dipped by 10% to 13% and 11% to 12% respectively.

In Ajman, rents for affordable housing units fell by 1% in Q1 2018 and by 12% year on year. High-end inventory saw a drop of 3% over the quarter and 11% between Q1 2017 and Q1 2018. Studios to three-bedroom apartments in Ras Al Khaimah and Fujairah recorded declines of 1% over the quarter, and over the course of the year, rentals dipped by 10% and 13% respectively for affordable housing units. Meanwhile, high-end units reported an annual decrease of 8% in Ras Al Khaimah and 10% in Fujairah.

John Stevens, Managing Director of Asteco, said: “We expect a further pressure on apartment rental rates, as recovery rates in the Northern Emirates are directly impacted by the delivery of supply in Dubai.”

In the Northern Emirates, government priorities remained geared towards infrastructure development. In addition, more master plan and/or large-scale developments are starting to materialise including three projects worth AED 2.7 billion dirhams including Maryam Island, initially announced in 2016 by Eagle Hills and Shurooq, a strategic alliance to develop Sharjah’s real estate market and drive investment.

Stevens added: “The launch of residential developments is on the rise in the Northern Emirates, with projects spanning a total of over 100 million square feet of land area scheduled for completion by 2025 in Sharjah alone.”

Sharjah apartment rental rates across various locations decreased by 1% on average in Q1 2018 and by 12% year-on-year. The most significant drop of 4% was recorded in Rolla, whilst rates remained unchanged over the quarter in areas such as Abu Shagara, Al Butina, Al Yarmook and Al Wahda. Annually, records show rental rates fell by 14% in Al Wahda, 13% in Abu Shagara, 9% in both Rolla and Al Yarmook, and 7% in Al Butina.

Meanwhile, office rental rates continued to fall by 2% on average. Rents were stagnant in Q1 2018 in areas such as Buhaira Corniche, Al Qasimia, Clock Tower Roundabout, Al Yarmook and Industrial Area, while Al Taawun and Al Wahda reported a drop by 5% and 2% respectively.

Whilst no major residential and office projects were delivered in Q1 2018, Sharjah expects additional residential supply on completion of Nasma Residences Phase 1 and Al Zahia Residences, both due for handover by end-2018.

Summarizing Asteco’s outlook on real estate developments, Stevens said: “The recently implemented legislation that allows non-Arab nationals without a UAE residency visa to purchase properties in Sharjah on a 100-year renewable lease is expected to stimulate demand and ultimately increase foreign investment in the real estate market. In addition, continued efforts to develop the private sector and emphasis on diversification strategies are anticipated to strengthen the economy and shape a favorable environment for job creation, business growth and investment.”

For more details, please visit www.asteco.com