Image credit: Kiev.Victor / Shutterstock.com
Sharjah residential rentals ‘seeing new highs’
Sharjah, May 28, 2013
The rental residential market in Sharjah is moving back towards the peak of 2007 as a result of the rising rents in Dubai and an influx of people who are being priced out of the market, an industry expert said.
Demand is now outstripping supply in the Sharjah market as many new buildings were mothballed during the downturn, so available new stock is limited, added Cluttons, the real estate specialist which has enjoyed a dedicated Middle Eastern presence since 1976.
The recent launch of Arenco Golden Sands Tower in the Al Nahda area of Sharjah, illustrates the strength of the rental market with prices from Dh41,000 ($11,160) for one bedroom units - prices that have not been seen in Sharjah for several years, Cluttons said.
Additionally, landlords are tightening up on their terms and are only prepared to accept a one cheque annual payment with a further 20 per cent of the annual rent required as a security deposit.
Shane Breen, associate director, at Cluttons in Sharjah said: “Sharjah is viewed as the most suitable alternative to those finding themselves out-priced by rising rents in Dubai, and demand is outstripping supply for the first time since the global financial crisis. We also note landlords offering tight payment terms, in a move away from flexibility.”
Whilst this tower doesn’t necessarily set the market rate, it represents a significant shift in the market, Breen pointed out.
The Arenco Golden Sands Tower is in a convenient location and offers a high standard of finishing and facilities, which is catering to current market demands. Other rental rates in the same location average at around Dh30,000 to 32,000 per year for a medium quality one bedroom flat, Breen said.
“Where previously investors have constructed new properties, we’re now witnessing greater demand for existing, income-generating properties which will reduce supply and cause rents to rise,” Breen noted.
Government legislation is in place to help protect tenants from spiralling prices. Sharjah Municipality offers tenants a protection period of three years from the start of a new lease with rates then moving to “market rate” on renewal of the fourth year.
Cluttons envisages that this will cause an increase in disputes between tenants and landlords via the rental committee hearings within the Municipality.
As the economy in Dubai and Sharjah continues to improve, Cluttons expects to see the residential market strengthen even further and rents for both apartments and villas to continue rising for the next six months. – TradeArabia News Service