Sharjah ... likely to see a sharp drop in relocations from Dubai.
Sharjah property market feels Dubai ripple effect
DUBAI, February 25, 2015
The property market in the northern UAE emirate of Sharjah, saw rental rate stabilise in last three quarters of 2014 as slowdown in the neigbouring Dubai stalled tenant migration, according to a report.
Throughout the Northern Emirates (which also includes Ajman, Ras Al Khaimah and Umm Al Quwain) strong levels of growth and high occupancy levels were recorded during the first half of 2014, but the second half saw downward pressure on leasing rates, which were already around 50 per cent cheaper than similar properties in Dubai, and even 60 per cent more affordable in Ajman, stated the report by property expert Asteco.
The outlook for the Northern Emirates’ real estate market in 2015 is set to follow the general UAE trend, stated Asteco in its latest regional overview.
A ‘muted’ year is on the cards in terms of market movement following modest 10 per cent average rental increase in Sharjah, Ajman, Ras Al Khaimah in 2014, it added.
In its ‘UAE Property Review 2014 Highlights & 2015 Outlook’ report, Asteco noted that Sharjah was likely to see a reduction in the number of people relocating from neighbouring Dubai due to improved rental opportunities from increased vacancies and a decline in rental rates.
“The Northern Emirates’ real estate market, and particularly Sharjah and Ajman, has traditionally been characterised by strong interdependence with Dubai due to overflow demand. That scenario peaked most recently in the first quarter of 2014 and with the current slowdown in Dubai, which has effectively put the brakes on tenant migration, a potential correction in rental rates for both Sharjah and Ajman is anticipated in 2015,” stated John Stevens, the managing director of Asteco.
Both Fujairah and Umm Al Quwain, however, are unlikely to see much change for the year ahead, as they are less inter-related with Dubai, said the property expert in its report.
Asteco pointed out that some tenants had also relocated to cheaper accommodation within the Sharjah borders as certain landlords were unwilling to negotiate rental rates in Fujairah and Umm Al Quwain.
The emirates of Sharjah and Ajman have historically seen less dramatic swings in rental rates over the last six years, with apartments on average 16 per cent and 17 per cent respectively lower in the fourth quarter than the peak rates achieved in 2008.
A two-bedroom apartment in Sharjah’s Al Khan area was leasing at Dh65,000 ($17,691) per annum in 2008 before hitting a low of Dh33,000 ($8,981) in 2012 and increasing further to Dh53,000 ($14,425) per annum in the final quarter last year.
"Looking at sales, following the announcement of the new Tilal City project in the third quarter of 2014 which was supported by new property ownership legislation from the Sharjah Government allowing expatriates from any country with valid UAE residency to purchase property within this development on a 100-year leasehold basis, this provided a much-needed boost for the emirate and an exciting new opportunity for investors," said Stevens.
“Several stalled projects were also restarted last year, namely the Bermuda Villas at Mina Al Arab in Ras Al Khaimah, the Ajman Pearl and the luxury Al Zorah master planned project by the Solidère Group,” he added.
The popularity of a number of high profile sea and golf course-fronting master-planned communities in Ras Al Khaimah, including Al Hamra Village, Mina Al Arab and Marjan Island, is also expected to hold firm this year according to Asteco.
The real estate expert forecasts stable levels of demand from both sales and leasing for these projects as these communities become more established, resulting in marginal rate increases.
“Ras Al Khaimah had a relatively good year in 2014, as a good value-for-money option with a selection of quality properties available at reasonable prices, and regulatory transparency on property ownership promoting strong demand; whereas Sharjah’s sales potential is still stymied to a certain degree by the absence of clear ownership regulations,” noted Stevens.
On the office market scenario, Asteco said this sector was likely to see further stagnation in Sharjah with rental rates expected to remain flat in 2015.
“Office leasing rates in Sharjah have been relatively stable since 2011 with only marginal fluctuations and two per cent growth in 2014. The corniche remains the most sought-after location for the limited number of inbound enquiries and we expect only moderate demand levels again this year,” noted Stevens.-TradeArabia News Service