Dubai: Rent declines in the UAE? Yes, it’ happening in Sharjah, at least during the final three months of 2022 as tenants made use of moving into some of the newer buildings and freehold homes delivered in the emirate.
With more new homes/buildings set for completion in first-half 2023, there could be further pressure on Sharjah’s residential rental market. Plus, this is also the year that Sharjah’s real estate market fully capitalises on recent changes to freehold laws. The same trend of a ‘flight to quality’ is playing out in Ras Al Khaimah and other northern emirates.
“The increased availability of completed properties with better quality specifications, facilities and property management - particularly in masterplan communities in Sharjah and Ras Al Khaimah - as well as Dubai, has effected an outflow from older areas/buildings,” says the latest Asteco report on UAE property market trends.
In 2022 as a whole, Sharjah rentals still ended positive, at around 5 per cent. But compared to the 15-35 per cent rent increases Dubai’s popular residential locations had during the same period, the increase is marginal.
Also, Sharjah has been seeing an unprecedented surge in interest for freehold deals, with most of the current buying coming from long-time residents who want to buy a home for themselves. How quickly developers come up with new launches will dictate Sharjah property market dynamics this year.
In the final three months of 2022, rent dips ranged between 1-4 per cent across Sharjah’s popular neighbourhoods. That contrasts with the ‘marginal’ rent gains buildings there had in the first nine months of the year.
At the end of 2022, a two-bedroom apartment in Al Nahda was averaging around Dh30,000, while a similar unit in Al Majaz would be in the Dh32,000 range. On the Corniche, a two-bedroom option would be Dh35,000. Slightly upmarket buildings in Al Khan would fetch the landlord around Dh36,500 on an annual lease, based on Asteco data.
And the most affordable options? The Al Yarmook area sees a two-bedroom unit quoting at Dh18,500 on average, while an address in Abu Shagara would be Dh26,500.
According to market sources, landlords with older buildings have gone in for wholesale makeover, adding in new and quality upgrades where possible. They have also recruited top-notch property management companies to take care of their assets – and stabilise the rents they can charge. The landlords’ hope is that by doing so, they stand a better chance to retain existing tenants and thus prevent a massive erosion in the building’s occupancy levels.
“2023 rental dynamics in Sharjah will depend eventually on the number of new homes being handed over through the year,” said an estate agent. “The Sharjah freehold boom is only starting – if developers can offer sales of homes that get completed in 1-2 years, the pressure on rentals will intensify.
“So, the first thing landlords need to do is retain tenants where possible.”
Rent-free is a staple
Longer rent-free periods have been used by landlords with older properties for the last two years, and likely tenants can expect more of that. They could aim for a two-month rent-free stay if landlords are in the mood to lease out immediately or renew contracts.
“The re-location trend experienced during 2022 is likely to continue in line with increased availability of new quality supply in the Northern Emirates,” states the Asteco report.
“Developers will continue to capitalise on these tailwinds, releasing a number of new projects. The positive market conditions coupled with increased delivery of properties, infrastructure and facilities across masterplan communities, will continue to attract investors as well as tenants, fuelling occupancy and performance.”
Sharjah landlords with older buildings have to up their game to compete.