Demand for affordable housing continued to attract new arrivals principally from Dubai to Sharjah and Ajman in Q2 2104. The latest Northern Emirates market report from Asteco, the Middle East’s largest full service real estate company, also highlighted a slowdown in residential rental growth rates as the supply and demand dynamic underwent a geographic shift.
The emirate of Sharjah recorded 3% quarter-on-quarter growth for apartment rentals with year-on-year growth dropping to 31% from 38%, whilst annual rates in the other Northern Emirates of Fujairah, Umm Al Quwain and Ras Al Khaimah remained stable with nominal increases of 2% and 1% respectively.
Bucking the trend, Ajman’s residential real estate sector received a fillip, registering a 7% increase in Q2 2014 and driven by the emirate’s ultra-affordability, with two-bedroom apartments available for between AED 30,000 to AED 45,000 per annum in comparison to up to AED 80,000 in Sharjah.
“Ajman is now taking over the mantle as the relocation destination for budget-conscious residents as landlords in Sharjah ask higher than average rental rates, particularly for brand new buildings in popular locations like Al Nahda, Corniche and Al Wahda. However, this eagerness to capitalise on market opportunity is not being matched by transaction volume, confirming that budget issues are still a key driver.
“Sharjah in particular has benefited in recent months due to aggressive rental rate increases in neighbouring Dubai, but this quarter saw a degree of stabilisation in Dubai’s more affordable communities, which led to a reduction in the number of residents choosing to relocate,” said John Stevens, Managing Director, Asteco.
The overall positive market sentiment at the start of 2014 has also seen the reprisal of a number of stalled residential projects and launch of several new projects in the Northern Emirates, which Asteco expects to boost current stock in the next few years.
RAK Properties recently launched the 141-villa Bermuda Villas project in Mina Al Arab, Ras Al Khaimah and Emaar also unveiled its Sharjah-Dubai border development. Al Mamzar Lake, which features waterfront homes, serviced residences, retail amenities, fountains and water-themed leisure attractions.
“This surge in the development pipeline in the Northern Emirates is a positive reflection on the future prospects of the UAE real estate sector as a whole. We are seeing investor confidence return as the country pushes ahead with the next wave of infrastructure projects that will create opportunities to build new communities supported by the requisite access, facilities and services that long term residents would expect,” noted Stevens.
Prospective tenants looking for prime accommodation in Sharjah or further north in Ras Al Khaimah can expect to pay up to AED 80,000 for a ‘high-end’ two-bedroom in Sharjah and up to AED 75,000 for a similar unit in a master-planned community in Ras Al Khaimah.
Despite overall stabilisation, rental prices in certain Sharjah neighbourhoods recorded above average growth in Q2 2014 led by a 7% rise in Al Khan where a one and two-bedroom unit currently command up to AED 45,000 and AED 55,000 respectively. Al Majaz and Al Nahda saw increases of 6% and 5% respectively, taking one and two-bedroom prices to AED 45,00/AED 55,000 and AED 45,000/AED 60,000.
Demand for office space in Q2 2014 remained flat with Sharjah’s commercial sector experiencing an extended period of stagnation and no movement in rental rates quarter on quarter.