The rental rates in the residential sector across the Northern Emirates remained relatively stable in the third quarter, but the office sector recorded minimal changes for the period, according to leading consultancy PKF.

Despite areas such as Al Majaz, Al Khan and Al Qasimiya in Sharjah reporting slight rental declines of approximately two per cent year-on-year (y-o-y) due to the completion of a small number of buildings, market rental indicators remained stagnant.

Nevertheless, as residents take advantage of subdued residential indicators in Dubai coupled with potential better value-for-money areas of Ajman, y-o-y rental figures in Sharjah have softened by approximately 1.5 per cent, stated the PKF in its report.

According to a third party report, y-o-y rental rates for apartments in Ajman during the third quarter of 2015 were three per cent up as a higher quality of supply entered the market. However, quarter-on-quarter (q-o-q) figures remained stable, it stated.

On the northern emirate of Fujairah, the report said the rental indicators remained stable; however a limited supply of quality units was evident as existing quality buildings achieved close to full capacity with some including a long waiting list.

In contrast, Umm Al Quwain recorded marginal rental increases, on average by approximately two per cent, it added.

According to PKF, the areas across Northern Emirates are looking to further attract investors within and outside of the UAE as recent development announcements include the Dh9.35 billion ($2.54 billion) Sharjah Waterfront City project across an area of 60 million sq ft, which is being developed by Sharjah Oasis Real Estate.

The development is expected to feature residential, commercial and hospitality components and accommodate approximately 200,000 residents. Phase one of the project is expected to be reaady by the third quarter of 2018.

In addition, Al Zorah Development Company announced two new communities in Ajman valued at Dh1.5 billion ($408 million), which consists of a golf themed villa community and beach residences.

Construction is likely to begin in early 2016 and is scheduled for completion in three and two years, respectively, stated the report.

On the office scenario, PKF said the rents in this sector recorded minimal changes during the third quarter as a limited supply entered the market coupled with a lack of demand from new and existing occupiers looking to re-locate or expand.

However, areas such as the Corniche and Al Wahda Street in Sharjah reported a slight decline in rental rates y-o-y of approximately five percent, it stated.

In the short term, rental rates are likely to come under increased pressure as the UAE continues to deal with the reduction in revenues from the hydrocarbon sector and the prevailing global economic conditions.

The Sharjah government continues to focus efforts on driving the area as a destination for SMEs, however the halving of brent crude oil prices per barrel in the third quarter of 2015 compared to the same period in 2014 has dampened SME business confidence, said PKF in its report.

Nevertheless, for areas like Sharjah the manufacturing sector plays a critical role and further efforts to develop this sector will support economic growth in the short to medium term, it added.-TradeArabia News Service