Sharjah: Residents living in the Northern emirates espcially in Sharjah and Ajman are upgrading their residential units as rentals in the areas are recording considerable drops.
Realty experts reckon the numbers will drop further towards the end of this year and that there is likely to be a paradigm shift of people moving for better rental prospects and bigger spaces. Additional supply of new units in the Northern Emirates is not helping strengthen rental rates. It is only increasing the negotiating power of tenants to get a better deal in the market, they say.
According to John Stevens, managing director, director of Asteco, said in the last one year (second quarter 2020 vs second quarter 2019), families have looked to upgrade within the emirate they are living for bigger residential units. “Single people, on the other hand, who have less commitment in the emirate they live in, are looking at other emirates for bigger spaces and units at competitive rates.”
He said residential rentals in Ajman have dropped a massive 17 per cent. Sharjah’s high-end and other affordable middle-level rentals have taken a hit too, with prices softening 13 per cent. “Ajman’s high-end units fared better, declining by only 9 per cent in the last one year. Rents in Ras Al Khaimah fell 11 per cent, and its high-end units 9 per cent.
“Overall, apartment rentals in the Northern Emirates continued to soften, with average quarterly and annual declines of 3 per cent and 10 per cent respectively. The downward pressure on rates is expected to continue with the supply coming,” said Stevens.
He added: “The falling rental rates and increased competition from Dubai’s rental drops is adding pressure on units in Northern Emirates. What we are seeing now is a ripple effect of a rental decline.”
Niraj Masand, CEO of Artha Realty, noted the paradigm shift as well. “We are seeing trends of people moving across emirates. As rentals get competitive in Dubai, some Sharjah residents working in Dubai are hoping to get some good deals on the other side so they can be closer to work. Similarly people living in affordable middle-level units in Ajman are looking to upgrade to better units in Sharjah.”
Stevens of Asteco said: “Further drops in residential rentals in Northern Emirates is expected. The vacancy levels in the emirates is also likely to increase.”
He said overall, in the Northern Emirates, the most notable decreases have been for high-end apartments in Sharjah and affordable middle-level units in Ajman.
“The ‘work from home’ culture, resulting from the COVID-19 movement restrictions, has increased demand for larger units. However, salary cuts and job losses have tempted any potential rental increases with many tenants ultimately being forced to reduce expenses or leave for their home countries altogether,” he said.
“In Dubai, the rental drops have tempted Sharjah residents to move to the emirate. In Dubai, we have seen an average, villa rents have fallen 10 per cent year-on-year (June 2019 vs. June 2020) and 13 per cent for apartments from the beginning of this year (Jan 2020 vs. June 2020).”
Stevens said Sharjah is becoming a more attractive destination to live in. “There are a number of retail developments planned and which will be ready. The Avenue Mall Al Seyough Community Mall and Nasma Square Mall are all earmarked for handover next quarter. This will add to the interest of residents living here and for those looking to move from other emirates into Sharjah.”