Dubai: Tenants in Sharjah should take note – There were minimal rent declines in the city’s most popular neighbourhoods in the first three months of this year compared with levels seen in the fourth quarter of 2020.
In fact, according to a new update from Asteco, the property services firm, there was no quarterly change whatsoever – probably for the first time in the last three years. So, if tenants in Sharjah have plans to shift their current place of residence, they will do well to negotiate a new rental contract at the earliest.
Current rental options show that a two-bedroom in the Al Nahda area could be picked up anywhere from Dh18,000 a year to Dh45,000 depending on the building and its upkeep. The Al Khan (Al Mamzar) area options would be for Dh25,000-Dh47,000 and Al Majah’s are Dh22,000-Dh42,000.
41%The rental drop for apartments in Sharjah since the last peak in Q1-2015
Still in retreat
Now, if quarterly declines are no longer there – or at least in the first three months – Sharjah rentals in the residential space are still down 13 per cent from what they were a year ago. Ajman rentals too are down by about 10 per cent. Ras Al Khaimah shows the slightest year-on-year drop, of 4 per cent.
These numbers suggest that the UAE’s rental market seems to be nearing stability after three to four years of declines. The same is happening in Dubai, where in fact, some locations are actually seeing rental gains in recent weeks.
At the Palm or the Downtown, rents have gained 4-5 per cent between fourth quarter 2020 and first quarter of this year. These are not confined to the top end of the market.
According to feedback from estate agents and tenants, locations such as the Executive Towers in Business Bay and some of the top-notch high-rises in Dubai Marina have seen asking rentals shoot up by even 10 per cent and more. “This is what landlords are demanding, and they keep making the claim that other landlords in the same tower have raised their rents,” said a tenant. “To suddenly be confronted with a 10 per cent increase for renewal is a concern.”
10%Average rental dip for apartments in Dubai over the last 12 months
Even the Asteco report provides indications that rents are turning direction. A two-bedroom apartment in Business Bay averages Dh57,500 to Dh100,000, while in Dubai Marina, the same would have a wide variance of Dh55,000-Dh135,000. Quarter-over-quarter increases are in the 4 per cent range, even though year-on-year rents are still down 7-8 per cent.
A Greens’ two-door apartment has asking rates of Dh65,000 to Dh110,000, while even JLT, where rent declines have been the sharpest over the last 12 months, current average on a two-bedroom unit is Dh42,500-Dh95,00.
Head for affordable
The city’s more affordable locations – Deira, International city, Jumeirah Village, Sports City – have not seen any spikes. It could be that most of the new project completions are happening in the affordable space, and that’s why rents are not yet showing upward movement.
A two-bed in Deira would be around Dh35,000-Dh75,000, while International city rates are Dh35,000-Dh45,000. This after a 2 per cent drop between December last and end March.
“Rental rate growth in Q1 2021 was nothing short of a ‘mixed bag’ with positive and negative changes recorded on an inter- (across) and intra- (within) community level,” according to Asteco. The same shifts are showing up in sales too.
“Apartment sales have also shown an increased level of interest since the beginning of 2021 with both activity and prices in certain communities such as Jumeirah Village (5 per cent) and Dubai Sports City (5 per cent) recording notable gains. However, the economic impact of COVID-19 on the real estate market has yet to be fully quantified.
“Over the short- to medium-term it is likely to heighten levels of uncertainty, and the potential for increased volatility (both in terms of values and activity) will continue.”