Villa rents in the city seem to have turned a corner although apartment rents continued to decline. Meanwhile, resilience in office rents in Al Soor and the prime fringe and fringe areas of Al Majaz continues to build, with rents remaining constant through the first half of the year. 

Villa rents turn a corner

Average residential rents in Sharjah fell by 10.6% during 2016, to stand at a little over AED 63,000 per annum. 2017 has delivered a slightly more encouraging picture, with villa rents rising by 11.7% in the first six months of the year to stand just shy of AED 112,000 per annum, following positive growth in both Q1 and Q2. This is the first rise in villa rents since late 2015 and reflects the growing awareness of the cost advantage offered by villas in Sharjah when compared to rental rates in Dubai and Abu Dhabi, where average annual villa rents at the lower end of the price spectrum start at roughly AED 140,000 to AED 150,000.

Apartment rents have, in contrast, maintained their downward trajectory, slipping by 7% in the six months to the end of June, building on the 8.1% decline in 2016. In Al Nahda, rents have lost the most ground amongst the markets we monitor, decreasing by 10.9% between January and June. Interestingly, in this submarket, the rate for one-bedroom flats has dropped by almost a fifth so far this year to stand at AED 38,000 per annum, while three-bedroom apartments (AED 70,000 per annum), were the only apartment type to register any growth across the areas we monitor.

Mixed outlook for the residential market

Apartment rents are expected to continue softening over the next six months, likely mirroring declines in Dubai of 5% to 7% as landlords move to remain competitive. Demand for villas is likely to continue rising, fuelled by the relative affordability of homes compared to those in Dubai, which in turn will remain a key catalyst behind the multitude of mixed use freehold projects bubbling through.

Office rents remain firm

The resilience of office rents in Al Soor and the prime and fringe areas of Al Majaz has taken hold this year, with rents remaining unchanged during the first six months of 2017. This is in contrast to last year, when rents slipped by as much as 9.3% in prime areas of Al Majaz to AED 68 psf, while Al Soor (AED 60 psf) registered a slightly less severe correction of 7.7% over the same period.

While we have previously highlighted the small size of Sharjah’s Grade A office market, this has kept it relatively well insulated from more macro issues compounding global growth, and there remains little in the way of new demand streams aside from the constant requirements from the public sector. In fact, the 2017/18 Government of Sharjah Budget aims to create 1,800 new jobs for Emiratis.

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See also:

How to buy and rent property in Sharjah

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