Sharjah apartment rents see steep decline in 2017

Villas in Sharjah bucked the wider trend of falling rents in the emirate's residential rental market, recording an increase of 1.7 per cent and taking the rate of growth to 0.4 per cent during the last quarter of 2017, according to real estate consultancy Cluttons.

Over the last two years, Sharjah's villa market has grown in popularity, appealing to those households priced out of Dubai or seeking a more family-oriented lifestyle.

Suzanne Eveleigh, Cluttons' head of Sharjah, said: "Communities such as Al Zahia have been a runaway success and with most major new shopping mall developments in Sharjah anchoring these new lifestyle destinations, the future of community living in the emirate appears relatively buoyant, especially when compared to many other property segments in the UAE."

In contrast to the villa market, apartment rents in Sharjah registered a steep decline of 13.6 per cent in the last quarter of 2017, compared to a decline of 10.6 per cent in 2016. Research shows that Abu Shagara topped the list of weakest performers, with rents retreating by 15.1 per cent during 2017.

This market has been evolving ever since the used car showroom dealerships vacated the area at the end of 2015. Much of the demand here has been driven historically by those working in the used car industry. Many of these households have now relocated, which has pushed vacancy rates up to between five and 10 per cent and rents are declining as landlords move to entice demand. The only other market to register double digit declines was Al Qassimiya (-10.6 per cent).

According to the report, Sharjah's residential rental market is set to face pressures from rising stock.

"Many landlords are reluctant to adjust advertised rents downwards due to concerns about alienating existing tenants. However, with tenants increasingly seeking out new and energy-efficient buildings, reflecting household financial pressures stemming from the January 1 introduction of VAT, rising utility bills and rising inflation levels, we feel landlords will need to be flexible with rents and payment plans, particularly in older buildings, to sustain demand," added Eveleigh.

Faisal Durrani, head of research at Cluttons, said: "With a sudden turnaround in economic growth or residential demand unlikely to increase during 2018, rents will continue to moderate, with apartments likely to see corrections of five to seven per cent next year, while villa rents are expected to experience growth of between one to two per cent. This makes Sharjah's villa market the only property segment in the UAE to see sustained positive growth. This is likely to prompt further investment in the city's villa segment."

- deepthi@khaleejtimes.com