Residential rents in Sharjah increase 26.4% from same time last year
Residential rents in Sharjah have increased by 5.3% in the third quarter of 2014, compared to a 5.7% increase in the second quarter, according to a new report by Cluttons.
According to the Winter 2014 Sharjah Residential Market Outlook report, Sharjah rents continue to face upward pressure as supply remains limited. At the end of Q3 2013, rents in Sharjah were found to be 26.4% higher than the same time last year.
Reasons behind the surge in tenant demand include the trend of reverse migration from Dubai as well as several businesses finding Sharjah an affordable option for bulk staff housing.
Due to a lack of alternative options in the market, many households are also remaining in situ at renewal, taking advantage of the three year rent cap offered by Sharjah Municipality.
“The shortage of supply means that households looking to reside in the emirate will often settle for what is available, while searching for better quality stock. We expect that the unavailability of stock, along with the rising demand will help to drive a wave of refurbishments across some of the city’s older buildings,” said Steve Morgan, Chief Executive of Cluttons, Middle East.
Growing demand can be observed in the sales market, the report says, with schemes like the recently launched Tilal Properties, which will allow expatriates who are UAE residents to purchase land in Sharjah.
“As the government continues to ease restrictions on foreign ownership, developers are increasingly turning their attention to gated communities with a key focus on matching the quality of developments seen in suburban Dubai,” Morgan said.
“The emergence of similar freehold schemes will pave the way for investors looking to enter a market where average home values are roughly two-thirds lower than that of Dubai. However, without a proven track record, development financing is likely to remain challenging,” he added.
“While the current proposed 20% ceiling on the volume of sales to non- Arabs per scheme will help to curtail the exponential growth seen in Dubai and Abu Dhabi, it will also limit the market’s exposure to an extent as this ruling is likely to translate into a slow, but steady rate of deals.”
Demand for quality office space in Sharjah is also set to rise, Cluttons said, forcing occupiers to either absorb costs or relocate.