A rise in new supply and the stabilisation of rents in Dubai has resulted in a three per cent quarter-on-quarter drop in residential rents in Sharjah and Ajman in the second quarter, says Asteco’s Northern Emirates Q2 2015 real estate report.
Sharjah and Ajman landlords were hit by a rise in vacancy levels. Enquiry levels for units were also lower compared with the previous quarter, says the report.
“Ajman has seen the handover of a large amount of new supply in recent months, at a time when newcomers to the city are fewer. This resulted in an internal movement, away from older buildings to newer properties, particularly one- and two-bedroom units, as tenants upgrade,” said John Stevens, managing director of Asteco.
Tenants can currently rent a two-bedroom apartment on the Sharjah Corniche from Dh48,000 to Dh80,000 per annum. A similar unit in Ajman would cost Dh32,000 to Dh40,000 a year.
Despite a slow second quarter for the Northern Emirates, rents remained stable in Umm Al Quwain and Fujairah. This could be attributed to increased economic activity at the ports and free zones. Asteco reports that although residential rents declined in the second quarter of 2015, they were still higher in comparison with the previous year in Fujairah, Ras Al Khaimah and Umm Al Quwain.
The annual rent for a two-bedroom unit in a high-end Fujairah building currently ranges from Dh55,000 to Dh62,000; in newer Ras Al Khaimah developments, they range from Dh50,000 to Dh65,000. Umm Al Quwain is the most affordable with rents ranging from Dh28,000 to Dh30,000, although with lesser-quality apartments, said Asteco. On the sales front, Ras Al Khaimah has been the success story in the quarter, with established communities such as Al Hamra Village and Mina Al Arab continuing to witness good levels of demand, especially for competitively priced villas and townhouses.
“This prompted the launch of the second phase of Flamingo Villas by RAK Properties, following strong sales performance for phase one, where villas achieved just over Dh600 per square foot; a similar price to that of a three-bedroom in Al Hamra with golf course view, which sell for Dh500 to Dh700 per square foot,” said Stevens.
Sharjah, however, presents a different picture; the emirate had recently launched projects to non-Arab expats who could purchase plots/units with 100-year leasehold rights.
“Sharjah’s sales market has opened up in recent months. However, except for land plots at Tilal City that were priced in line with market demand, few properties have actually been sold due to the high asking prices, which failed to match buyer expectations. The lack of activity was further compounded by a wave of affordable project launches in neighbouring Dubai, which diverted prospective buyer interest,” said Stevens.