Residential rents in the UAE's northern emirate areas including Sharjah, Ras Al Khaimah, have dropped an average 35 per cent since the first half of 2008, and are seen falling further this year, on increased supply and weak demand, a report said.

Rents in Sharjah, the third-largest emirate in the Gulf country, have suffered the sharpest fall, declining around 50 per cent since their peaks two years ago, CB Richard Ellis said on Sunday.

But rents in Sharjah are the highest among the northern emirates due to larger and more concentrated commercial and industrial activities and its relative proximity to Dubai, the real estate services firm said.

'Leasing and occupancy rates for both offices and residential properties (in the northern emirates) are likely to experience further declines during the second half of the year, with multiple buildings already complete and awaiting utility connections,' the report said.

Sharjah could see an additional 37,000 sq m of new office supply and around 7,000 homes in 2010, provided construction and utility delays are minimised, the report added.

Residential rents in the northern emirate of Ajman are down 42 per cent since the first half of 2008, while rents in Umm al-Quwain, the smallest emirate in the country have fallen 39 per cent.

Prices in Ras al-Khaimah, the most northerly of the Gulf state's seven emirates, fell 28 per cent while Fujairah has seen declines of 23 per cent, the report said.

'The lower levels of decline in some emirates has been due to lower levels of development activity and delays in the completion of units,' the report said.

The UAE's two largest emirates are Abu Dhabi, home to over 90 per cent of the country's oil, and Dubai, the Gulf's commercial and tourism hub.

'Real estate offerings in the northern emirates continue to feel a strong influence from the Dubai market, with the availability of significantly reduced rates and better infrastructure enough to convince occupiers to relocate back to Dubai,' CB Richard Ellis said.

Migration from Sharjah and Ajman to Dubai could worsen if power issues faced by residents in both emirates persist, the report said.

Average house prices in Dubai eased 4 per cent in the second quarter this year from the previous quarter, but were up 7 per cent year-on-year, Colliers International said in a report earlier in August.-Reuters