With rental and sale prices in Dubai and Abu Dhabi softening, residential real estate in Sharjah and Ajman is following a similar trend. “As is the case in Dubai and Abu Dhabi, property prices and rentals in Sharjah and Ajman have also recorded a decline over the past year, however, a more moderate decline when compared to the other two emirates,” said Imran Husain, head of residential valuations at Colliers International Mena.
Since the beginning of the year, apartment rental prices in Sharjah and Ajman have declined by 5.7 per cent and 7.4 per cent respectively, according to Reidin. “The inflow of new residential housing units in Dubai and Sharjah, coupled with subdued demand, has put further pressure on sales and rental prices in Sharjah and Ajman, as their real estate markets are interlinked to Dubai’s,” said Ali Siddiqui, research analyst at Reidin.
He said apartment sale prices in Sharjah have declined by 2.7 per cent since the beginning of the year, while apartment sale prices in Ajman displayed no significant changes this year.
Aditi Hariharan, senior consultant, strategic consulting and research, Cavendish Maxwell, said rental declines in Sharjah during the second quarter were more pronounced compared to the other northern emirates.
While they benefit from low cost of living and doing business, Hariharan said Dubai’s oversupply and weak rental climate have further put pressure on rents in Sharjah and neighbouring Ajman. However, she said real estate in Ajman is still an attractive option for local and expatriate investors due to low prices and proximity to Sharjah and Dubai. Given that rental declines outpaced sale prices in the first half of the year, Ali pointed out a slight drop in the gross rental yields across various asset classes.
“Despite the decline in rentals and slowdown in the overall real estate market, several sections of Sharjah and Ajman’s property market still offer a decent rental yield to investors,” he said.
The average apartment gross rental yields in Sharjah and Ajman currently stand at 5 per cent and 7 per cent respectively, according to Reidin.
Research by Data Finder further revealed that Ajman has always enjoyed strong yields, and in some areas such as Emirates City, gross yields for apartments have reached 10.8 per cent. “In Sharjah, gross yields hover in the 5-6 per cent range, with areas such as Al Nahda seeing 6 per cent gross yields for apartments,” the data platform said.
However, Colliers’ Husain pointed out that Dubai is still much of a challenge to the northern emirates, even more now as the entry price for an investor has been considerably reduced. He noted that gross yields in some developments in Dubai are edging towards 8.5 per cent.
Reputed builders such as Eagle Hills and Emaar are developing master-plan projects up north. Eagle Hills, in a joint venture with Sharjah Investment and Development Authority (Shurooq), is building three major developments in Maryam Island, Kalba Waterfront and Palace Al Khan in Sharjah.
“Over 10,000 residential units are currently under construction throughout Sharjah, expected to be handed over by 2021. Other upcoming residential supply includes master-planned communities such as Maryam Island, Al Mamsha, Al Zahia, Al Aljada and Sharjah Waterfront City,” said Hariharan.
In Ajman, Cavendish Maxwell estimates over 1,500 apartment units to be completed in the second half of the year, with most of the supply located in Meshairef, Emirates City and Al Butain.
“Al Zohra, a mixed-use development planned for completion in 2023, has been delayed; however, once completed, it is expected to accommodate 50,000 people,” said Hariharan.
According to Data Finder, supply levels remain healthy in both emirates, with Sharjah expected to see 11,763 units coming online between 2019 and 2022, and Ajman set to have 6,079 units between 2019 and 2021.
Ali said the delivery of new residential units has caused a fear of oversupply, which has definitely moved in the favour of tenants and investors.