Cheaper housing, but tenants in this UAE emirate want rent rise to stop

Cheaper housing, but tenants in this UAE emirate want rent rise to stop
Expect residential rents in Sharjah to decline further by 3-5%: says Cluttons
By Parag Deulgaonkar
Published Wednesday, May 11, 2016

Cheapest Rent in Dubai

Number of tenants requesting rents to be left unchanged at renewal continue to rise. (Supplied)
Tenants in Sharjah are increasingly requesting landlords to leave their rents unchanged at renewal and are offering to pay the annual rent in six to eight cheques instead of the usual one or four cheques, indicates a report by property consultancy Cluttons.

This is despite residential rents in the emirate continuing to decline, falling an average of 5.7 per cent during first quarter 2016 as yearly decline reached 8.3 per cent.

“An easy win for landlords would be to demonstrate greater flexibility on rental payment terms. Tenants are increasingly seeking to boost the number of cheques used for rental payments. We have noted a rise in the number of requests for six to eight cheques per annum, up from the usual arrangement of one to four cheques per annum,” the consultancy’s Sharjah Spring 2016 Property Market Outlook report said.

“This reflects both the recent affordability challenges, underpinned by a 25 per cent rise in rents since 2013, as well as the growing nervousness around job security in some business segments,” it adds.

Dubai Rent

Avoid the Void

Furthermore, the number of tenants requesting rents to be left unchanged at renewal continue to rise.

“While it may be tempting for some landlords to make significant upward adjustments in cases where rents have been unchanged for a period of three years, in accordance with Sharjah Municipality regulations, there is an opportunity for landlords to honour such requests and avoid the risk of lengthy void periods, particularly as the market continues to soften,” the report states.

It adds “a handful of landlords have begun to recognise the deteriorating level of tenant demand and are leaving rents unchanged at renewal, however this is yet to become the norm.”

Unlike 2015, fall in villa rents have accelerated, with average rates declining by 13.2 per cent in the first quarter 2016 alone whereas average apartment rents fell by 1.5 per cent in the first quarter, leaving them 7.7 per cent from same period last year.

Declines to continue

Weaker market conditions are expected to persist as the year wears on, with rental falls of between 3 per cent and 5 per cent, on average.

“Rents across Sharjah’s more affordable areas remain linked to the performance of Dubai’s rental market. With a weak short-term outlook for Dubai, we do not expect to see any turn around in rental value growth until jobs linked to the World Expo in 2020 start to materialise, which we should start to see in the next 12 to 18 months. Until then, the rental market in Sharjah is expected to remain subdued,” said Faisal Durrani, Head of Research at Cluttons.

Posted on May 11, 2016 in Dubai news, Property, Real Estate

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