Dubai: The creation of a full-fledged rental index could be the biggest outcome from the proposed changes to Sharjah’s real estate laws, according to property market sources.
If such a rental index is applied, it would create a real-time benchmark for rental changes in the emirate, and at a time when demand for residential options is scaling up by the day across its most popular residential locations. Such an index would immediately set clear benchmarks on what the rental average would be in these neighbourhoods.
Sharjah residential rents have already seen a spike, most notably since mid-2023. Renewals and new contracts entered into during the first 3 months of 2024 also reflect the pressure on rental rates, market sources add.
It was on Sunday that Sharjah announced a draft law has been issued that looks specifically into property leasing. It is the first such change to the current version of the law since 2007. This would also represent the second major update to the emirate’s real estate regulations, coming after the passage of the freehold law. (That meant title deeds could be issued to the owners of properties in freehold investment zones rather than the 99-year leases.)
With more new properties getting completed, in freehold and non-freehold areas, the latest law when it comes into effect will have a major say. “These will be game-changing rules for Sharjah and usher in a new wave of confidence for landlords as well as tenants,” said Usman Jameeel of Azco Real Estate.
“We foresee heavy interest as Sharjah cements itself on the UAE’s real estate map.”
Villas and townhouses in newer areas such as Aljada and Al Zahia are experiencing an average increase of 15-20%. This is due to the limited options available for community living experiences currently offered in the Sharjah market
Sharjah’s current rental rules
The emirate has for some time now had a rent freeze during the first three years of a new leasing contract. Once the three year period expires, landlords could raise rates, but any further increases would be a further two years after.
“This has been a key factor in maintaining overall stability in the rental market,” said Muhammad Qasim Ikhlaq, Sales and Leasing Manager at Betterhomes Sharjah. “Year after year, there has been an increase of about 5 per cent in rental contract prices for similar apartments in newly populated areas.
“There is a gap in the market concerning rent regulation from 2007 until now, given the significant changes in the dynamics of the Sharjah real estate market.
“We expect the new laws to regulate landlord-tenant relations and provide clear guidelines for more robust - and up-to-date - systems.” (According to Ikhlaq, while fewer properties were handed over in 2023, most of them ended up in the rental market.)
The changes to the Sharjah lease laws opens up the door for short-term leases (in tandem with STCM) as well as regulating rental rates and rises for traditional tenants
A big boost for short stay rentals?
The other big boost from the rule changes would be Sharjah's short-stay rental market. The updates could bring in more transparency and regulate the terms and conditions entered into the leasing contracts between landlords, the tenants and property management companies who do the actual leasing.
"Sharjah's short stay market is growing since the 2022 launch of the 'holiday homes project'," said Anna Skigin, founder and CEO of Frank Porter. "While the daily rate and occupancy levels are below Dubai’s, both have been growing year-on-year.
"We anticipate that with more clarity on the rules and ease of regulation, the numbers will jump. Sharjah is a touristic gem – however, we are not seeing that reflect in the number of Airbnb listings yet.
"For comparison there are around 500 active listings in Sharjah, versus 24,000 in Dubai. We anticipate a growth of listings in Sharjah, as regulations become easier."
