Cluttons reports that many people who are getting priced out of Dubai are opting seek property in Sharjah, the emirate located to the northeast of the Middle Eastern business hub. Both Dubai and Sharjah are experiencing increased rental price growth due to greater interest in the area as well as limited supply caused in part by many property projects being put on hold during the global financial crisis. The Sharjah Municipality offers tenants price protection for three years upon entering a new lease, however, which should keep many from facing spiraling rent costs. For more on this continue reading the following article from Property Wire.
The residential property rental market in Sharjah is strengthening with landlords in the Emirate benefiting from the rising residential rents in Dubai and an influx of people who are being priced out of the market accordingly.
According to the latest report from Cluttons, the real estate specialists who have been in the Middle East since 1976, rental prices not seen for several years are now being achieved.
The firm cites the example of recently launched Arenco Golden Sands Tower in the Al Nahda area of Sharjah, illustrates with prices from AED41,000 for one bedroom units.
Additionally, landlords are tightening up on their terms and are only prepared to accept a one cheque annual payment with a further 20% of the annual rent required as a security deposit.
‘Sharjah is viewed as the most suitable alternative to those finding themselves out priced by rising rents in Dubai, and demand is outstripping supply for the first time since the global financial crisis. We also note landlords offering tight payment terms, in a move away from flexibility,’ said Shane Breen, associate director at Cluttons in Sharjah.
He pointed out that whilst this tower doesn’t necessarily set the market rate, it represents a significant shift in the market. The Arenco Golden Sands Tower is proving popular because it is in a convenient location and offers a high standard of finishing and facilities.
Other rental rates in the same location average at around AED30,000 to AED32,000 per year for a medium quality one bedroom flat.
Demand is now outstripping supply in the Sharjah market as many new buildings were mothballed during the downturn, so available new stock is limited.
‘Where previously investors have constructed new properties, we’re now witnessing greater demand for existing, income generating properties which will reduce supply and cause rents to rise,’ added Breen.
However, government legislation is in place to help protect tenants from spiralling prices. Sharjah Municipality offers tenants a protection period of three years from the start of a new lease with rates then moving to market rate on renewal of the fourth year.
Cluttons envisages that this will cause an increase in disputes between tenants and landlords via the rental committee hearings within the Municipality.
As the economy in Dubai and Sharjah continues to improve, Cluttons expects to see the residential market strengthen even further and rents for both apartments and villas to continue rising for the next six months.
This article was republished with permission from Property Wire.