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Though the pace of increase in Sharjah rents has slowed down marginally in third quarter 2014 compared to the second quarter, but overall the lettings market has risen 23 per cent in the first nine months of the year, according to Cluttons latest report.
The increase has been primarily driven by reverse migration from Dubai and companies taking up bulk accommodation for their staff, reveals Cluttons’ Winter 2014 Sharjah Residential Market Outlook report.
Rents rose 5.3 per cent in the third quarter 2014 compared to a 5.7 per cent rise in the second quarter for apartments, while increase in villa rents was a little below seven per cent in the third quarter as against 8.2 per cent in the second quarter.
Current average rents for one-bedroom apartments in Al Majaz, Al Nahda and Al Qassimiya stand at Dh52,000 per annum (pa), Dh43,000 pa and Dh42,000 pa, respectively.
Average rents for two-bedroom apartments in Al Majaz is Dh65,000 pa, while for Al Nahda and Al Qassimiya it is Dh60,000 pa and Dh53,000 pa, respectively.
“The dip in the pace of rising villa rents is not a reflection of weakening demand, but instead points to an emerging affordability threshold, as average household incomes are failing to keep up with the fast paced growth in rents,” Cluttons’ international research and business development manager, Faisal Durrani, said in the report.
“Overall, the behaviour of the lettings market in Sharjah reflects what has already occurred in the lettings market in both Abu Dhabi and Dubai and we expect this to persist. The core issue of affordability is expected to start curbing the strong rental value growth that has been recorded over the past 18 months.”
However, a lack of alternative options in the market has led to households remaining in situ at renewal, often capitalising on the security offered by the three year Sharjah Municipality rental cap.
Emirates 24|7 reported in August that landlords in Sharjah are not allowed to raise rents for two years post the first increase as per Sharjah Municipality regulation, but the landlord is free to fix a new rent post the three-year rent contract with a tenant is over.
Steve Morgan, Chief Executive of Cluttons, Middle East, expects unavailability of stock and rising demand will help to drive a wave of refurbishments across some of the city’s older buildings as landlords move to capitalise on the buoyant conditions.
Posted on December 1, 2014 in Uncategorized