Dubai: Tenants in Sharjah are yet to see any major rent increases being asked of them during renewal time – and whatever rises there have been are coming at or under the 5 per cent mark.
This is despite a significant number of existing Sharjah residents having exited the 3-year rent-freeze period on tenancy contracts entered into during 2020 and early 2021. (Sharjah does not allow landlords to effect any increases for the first 3 years on any new contract.)
In fact, many tenants who had reached the end of the 3-year period were expecting the new lease rates to shoot up – but nothing of that sort has happened. “Landlords are only focused on renewals, because for them it’s the easiest way to keep their cash flow flowing smoothly,” said an estate agent. “Most of them do not want to see overall occupancy levels in their buildings come down drastically.
“They are already facing competition from new projects getting completed in popular locations.” (Estate agents talk about the newly completed residential units dotting the Academic City district as where first-time residents in Sharjah are showing a preference.)
A recent report issued by the property services consultancy Asteco confirms that rental movements in Sharjah have stuck to a narrow range. And this has been the case right through this year. The report says the popular residential locations in the emirate have on average recorded a 4 per cent rise in the year-to-date.
Where rents have actually risen sharply are in the new residential communities (or high-rises), where the increases have touched 6 per cent on average. “Tenants capitalised on improved amenities and superior-quality apartments, driving this surge,” the report adds.
Increases by H2-24?
Some property market sources say that Sharjah’s established neighborhoods and apartment buildings too could start seeing more pronounced rent increases at some point during 2024. As in Dubai and Abu Dhabi, Sharjah too has been recording a fairly brisk growth of its resident base. Older residential buildings are starting to fill up as demand overflow builds - and with the presence of more budget-conscious residents.
“By second-half 2024, rental gains in Sharjah should speed up,” said an estate agent. “Tenants with renewals or even new lease signings will start feeling the pressure, and we could see some of that happen in Ajman too.”
The Asteco report cites rents for 2-bedroom apartments in Al Majaz as being between Dh20,000-Dh46,000, while those in Rolla average Dh18,000-Dh26,500. A similar apartment format in Al Nahda fetches rents of between Dh18,000-Dh35,000. All these locations, according to Asteco, have seen rent increases of only 1-3 per cent.
“What’s happening here is that even at a new building, landlords are not asking for rents much higher than the market average,” said an estate agent. “This is why across residential locations, there have not been any major rental distortions between new and old tenant leases.
“For now, that status is unlikely to change.”