Cheaper housing in Dubai suppresses Sharjah and Ajman rents
The growth in the number of developers looking to provide more affordable housing schemes to buyers in Dubai is having a knock-on effect in the Northern Emirates, with rents falling across the board and some landlords even offering monthly payments and rent-free periods to attract tenants, according to Asteco.
The firm’s Northern Emirates report for 2016 stated that apartment rents in Sharjah dropped by 3 per cent year-on-year, with one-bed and two-bed units dropping by an average of 5 per cent – to Dh32,000 and Dh43,000 per year respectively.
Asteco said that a doubling of a rent contract attestation fee from 2 to 4 per cent introduced last year meant that more Sharjah residents were staying put in existing accommodation. In a bid to tempt people into new buildings such as Al Marzouqi Tower in Al Qasimiyah and at Al Thuriyah’s Sahara Tower complex on the Dubai/Sharjah border, landlords have begun offering rent-free periods. Some are also offering more flexible payment terms of six to 12 rental cheques per year.
In Ajman rents dropped by 2 per cent last year, and in Ras Al Khaimah rents were 1 per cent lower.
Asteco predicted further rental declines in 2017 as more affordable stock is delivered both in Dubai and in other Northern Emirates. For instance, it expects 504 new apartments to be handed over at the Al Rayyan apartment complex in Sharjah, and more than 1,400 apartments at Al Marjan Island in Ras Al Khaimah.
John Stevens, the managing director of Asteco, said: “We could see further declines in 2017 if the supply of affordable property continues to stifle demand in the Northern Emirates.
“Sharjah and Ajman are expected to experience more downwards pressure on rates in comparison to Ras Al Khaimah and Umm Al Qaiwain,” said Mr Stevens.
Meanwhile, CBRE’s latest Ras Al Khaimah Marketview stated that residential rents in master- planned communities such as Al Hamra Village and Mina Al Arab dropped by about 5 per cent during 2016. It said that it expects rents to experience “further modest shifts” in the short to medium term.
Although Emaar’s plan to build a 2 million square metres development on Al Marjan Island and a new government scheme under way for 300 homes just off Sheikh Mohammed bin Zayed Road mean supply in RAK will increase, the “stable position of the local economy and sustained demand for good quality housing” meant the potential for further rent declines would be limited.
In Fujairah, the cost of the average one-bedroom apartment fell 7 per cent to Dh43,000 from Dh40,000, while the average two-bedroom was unchanged at Dh49,000.
Meanwhile forecasts for the number of new homes scheduled to be delivered in Dubai this year range from 41,000 by JLL to 61,000 by Cavendish Maxwell, although both firms have stressed that developers are likely to delay handovers to prevent further price declines.
A recent analysis of Dubai’s off-plan market by Reidin/Global Capital Partners found that 78 per cent of units sold between 2015 and the third quarter of last year had a price tag of less than Dh2 million.
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