Dubai: The 20 per cent and more rent increases in Dubai in these last 12-15 months has come as a huge relief for landlords in Sharjah – and now, they too are raising their demands.
In the 12 months to end September, there has been increases in Sharjah and the other northern emirates, but still within manageable proportions. The annual increase has been around 8 per cent, while for the period July to end September, it’s been at the 3 per cent increase mark, according to the new update from property services firm Asteco.
In Sharjah, a two-bedroom apartment in a relatively well-maintained building would still be available for Dh15,000-22,000, and a three-bed for Dh28,000-Dh34,000, according Asteco. A pattern of 6-9 per cent increases have also been noticed in Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah.
Even then, it’s still some way off from the 20-30 per cent increases Dubai’s residential areas have had during the same period. “What this means is those residents in Sharjah who might have been thinking of shifting to Dubai have decided to stay put,” said an estate agent. “We see requests for shifting between buildings or locations in the emirate, and not too many wanting to leave.”
Those landlords in Sharjah with newly completed top-notch buildings/communities are the biggest beneficiaries. Arada, the Sharjah mastet-developer, has two projects – Aljada and Nasma – where new homes are being delivered and are seeing a mix of end-users and tenants moving in. Market sources say that by mid-2023, Aljada could emerge as a prime lived-in residential hotspot.
Held the line on rent increases
Through the first-half of the year, residential rents in Sharjah and across northern emirates were still under pressure even as something totally 180-degree was happening in Dubai. Landlords in Sharjah kept slashing their rental demands during this period, and popular neighbourhoods saw further dips from where they closed end 2021.
It was by summer that things began to change, with landlords recording a sharp uptake in renewals. From there followed the increase in rentals, but it will be some time before rents in these emirates recover to their last peak in 2015-16.
Rents in Sharjah’s key hubs
In Al Majaz area, a two-bedroom apartment would be in the Dh20,000-Dh45,000 range, according to Asteco, while those in Al Qasimia and Al Nahda average between Dh17,000-Dh35,000 and Dh17,000-Dh45,000, respectively. The report finds that the Al Butina area was the only one to see a rental dip in the third quarter, while those at Abu Shagara remain unchanged.
Will new handovers suppress rent gains?
Sharjah will record a sizeable number of handover in the first-half of 2023, and demand for these will dictate the extent of increase – or otherwise – rents will have. “Assuming a sizeable portion of completed homes will see actual owners moving in, there will still be those left for the rental market,” said an estate agent. “The early signs for 2023 are that the emirate will continue to see further increases, but nothing too sharp.”
“Annual rental growth in the villa market remained substantial at 22 per cent, whilst average apartment rental rates rose by 15 per cent,” the report added. “Correspondingly, there has been a rise in rental disputes and eviction notices as landlords seek to benefit from favourable market conditions after years of decreasing rents.
“Whilst some tenants tend to use the RERA Rental Calculator to negotiate rents, others are willing to pay increases above the rental rates stipulated by RERA to avoid a dispute and the potential of incurring moving costs and ultimately paying higher rental rates for new lease agreements.
“Asteco anticipates rental rates to remain elevated towards the end of the year and into 2023, but rental growth is expected to slow with oversupply being a lingering concern.”