One-bedroom unit for Dh26,000 pa in Sharjah: Will rents fall further?

One-bedroom unit for Dh26,000 pa in Sharjah: Will rents fall further?
Poorer quality towers to face downward rental pressure: Asteco
By Parag Deulgaonkar
Published Tuesday, February 16, 2016

One-bedroom unit for Dh26,000 pa in Sharjah: Will rents fall further?

New supply of housing units in Sharjah coupled with a lower inflow of residents from Dubai will put downward rental pressure on lower quality apartment towers, according to Asteco.

“Rental demand is expected to be stagnant in Sharjah as a reduction in prices in neighbouring Dubai will lead to a lower than usual inflow of new residents, which may be worsened by reduced government spending and potential job cuts,” the consultancy said in its fourth quarter report

It expects over 1,000 units to be added to the market, such as CG Mall Residences, Al Rayyan Complex and a variety of buildings in Al Nahda and Al Khan areas.

“The overall market and specifically poorer quality developments could face a downward rental pressure,” the report said.

Rents for one-bed units in Al Qasimiah fell to Dh33,000 per annum (pa) in 2015 compared to Dh38,000 pa in 2014. In Al Khan, rents were down to Dh39,000 pa from Dh42,000 pa and in Al Nahda rose to Dh44,000 pa from Dh41,000 pa. The cheapest to rent one bed was in Al Yarmook, with rates averaging Dh26,000 pa, while the costliest was in Corniche (Dh48,000 pa).

Residential sales for the entire Northern Emirates are expected to be subdued as a bleak economic outlook will affect buyer’s sentiment.

“Only quality projects at truly affordable prices may be able to generate some traction and if proper property ownership laws and regulations are in place,” Asteco said.

In December 2015, Cluttons, a real estate consultancy, said residential rents had declined 1.6 per cent in the third quarter of 2015 – first in over two years – compared to the same period last year, but residents have told this website that they were facing rent increases of up to 30 per cent at the time of renewal.

The Law No. 2 of 2007, regulating the relations between landlords and tenants, details the rights of the parties, which are as follows:

# Article 9 stipulates that the landlord should guarantee the property is given on rent as per the specifications mentioned in the contract and in case any amenities found lacking, the tenant has the right to claim its addition or maintenance. It also mentions that landlords should carry out maintenance of the leased properties, unless both parties agreed otherwise.

# Article 11A states that the landlord is not entitled to increase the rent under a lease prior to the expiry of 3 years from the signing of the lease.

# Article 11B provides that the increase mentioned in Article 11A shall be according to the market rent of comparable properties and once decided will be applicable to that property for 2 consecutive years.

If the revised rental value cannot be agreed upon by the landlord and tenant, they may refer it to the Rental Committee who will settle the dispute and place a rental value on the property in question.

# Article 12 mentions the landlord will have no right to ask the tenant to vacate the property before the expiry of a period of three years from the first signing of the contract unless the tenant is refusing to pay the rent.

# Article 15A provides for the criteria which the Rental Committee will consider in determining the rental value. These include (i) the location of the property, (ii) number of floors in the property, (iii) the level of the property within the building, (iv) the finishes to the property, (v) services within the building, (vi) the age of the building according to the completion certificate and (vii) the area of the building.

Posted on February 16, 2016 in Property, Real Estate

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