- Residential market rents stagnate in Q3 2015
- New communities and gated villas outperform wider market
- Residential rents rise by 4.1% in 2015
- Commercial office market remains flat
Sharjah’s residential property market is starting to show signs of softening at the end of 2015, however this is not holding back new communities, which are continuing to emerge as the population and developments spread further north, says international real estate consultancy, Cluttons.
According to Cluttons’ Sharjah 2015/2016 Winter Property Market Snapshot, residential rents during Q3 2015 stagnated and recorded a marginal 0.3% increase, while year-on-year rents now stand at 1.6% below this time last year. This is the first time in over two years that average annual residential lease rates have contracted, but demand still remains for high quality stock and gated community living.
Faisal Durrani, Head of Research at Cluttons said, “Rising supply levels across many areas of Sharjah, coupled with price reductions in Dubai offering a shorter commute and increasing value for money in Ajman are starting to undermine rents. However, well-managed buildings that are perceived to offer better quality and increased facilities still have longer waiting lists than lower quality buildings and continue to drive demand. At the same time we are seeing reduced waiting lists for what is perceived to be lower quality stock.”
The report highlights that new communities and gated villas have continued to outperform the wider residential market, particularly apartments, with rents rising by 4.1% during the first 9 months of 2015.
Suzanne Eveleigh, Property Management Director at Cluttons said, “We’re experiencing a rise in the popularity of gated community living, and the relative affordability of Sharjah’s villa communities is helping to sustain the steady level of tenant requirements.”
The report highlights that this is in part due to developers focusing on this segment of the market, with the latest scheme to emerge being the AED 20 billion Sharjah Waterfront City, where 1,500 villas are planned.
In the commercial market, office rents across the city’s main submarkets registered no change during Q3, with the report referencing prime areas of Al Majaz (AED 75 psf) as remaining the city’s most expensive.
According to Eveleigh, “The ability of office rents to maintain their stability will very much depend on how the wider UAE economy fares in the face of the current global economic headwinds and the prolonged period of low oil prices.”
The government is focused on diversification and also aligning developments to its master plan of shifting the industrial areas out of the city and further north.
Durrani concluded, “Sharjah remains the UAE’s manufacturing nerve centre and the government’s strategy to build on this will no doubt help to drive further economic growth in the emirate in the short to medium term, but clearly the current economic environment is challenging.”