Dubai: Tenants in Sharjah don’t have to think - or search - long for a reason to renew their rental contract. Or even opt to move to a new apartment within the emirate.
Sharjah residential rentals continue to see limited or no rental increases this year, thus encouraging tenants to stay put and ease the load on their budgets.
Landlords and property management companies associated with some of the upscale residential towers in Sharjah say their annual lease renewals are running at well over 80 per cent. Plus, given that many tenants had shifted within the last 3 years also means they don’t get to see any rental hike demands.
According to a recent report by property services firm Asteco, in the 12 months up to the end of June, the popular residential districts in Sharjah averaged between 1-3 per cent rental gains. The Al Nahda area towers saw a 3 per cent hike, but at Al Majaz and Al Qasimia, the year-on-year increase is confined to 1 per cent. Rolla and Al Butina neighbourhoods saw about 2 per cent, according to the Asteco data.
“What’s happened is that new towers completed in Sharjah over the last 3-5 years saw record intakes in their occupancy levels,” said an estate agent. “But these apartments were leased only at a slight markup to the wider city average, with top-end towers fetching around 5 per cent.
This meant there wasn’t a significant rental gap developing between older and new apartments. That’s been the key dynamic in Sharjah rentals.
This compares with the average 21.7 per cent increase that Dubai’s residential space recorded between January to end of August, according to the latest updates from the consultancy CBRE. While new rental contracts in some of the poshest Dubai districts may have hit a ceiling – or close to – it’s not the case with other areas.
According to the Asteco data, a two-bedroom apartment in Sharjah Al Nahda currently lists between Dh19,000 to Dh47,000 for an annual rental. The wide variance denotes factors such as age and quality of the building. (Market sources say that Al Nahda and a couple of other high-demand districts will see more upscale towers ready for occupancy in the near-term, and at higher average rentals for those areas.)
Incentive to buy?
In Sharjah, even as rents stay steady, its freehold market is building up nicely. More villas and apartments that were sold in recent years will be handed over to owners in the coming weeks.
But the big rush is yet to take place in the emirate’s freehold space. “For that to happen, developers should aim for residential tower launches that offer title deeds to the apartments,” said an estate agent. “Dubai and Abu Dhabi have in these 3 years experienced a rush of end-user buying activity, and it’s still there even with the increase in property prices.
“Sharjah’s freehold requires that end-user rush, especially on homes coming under Dh1 million.”
“Sharjah developers could start experimenting with lower down payments and stretch the instalments over a longer period after handover,” said a banker. “This strategy worked extremely well in Dubai, and that’s what led to the end-user buying spurt.”