Monday, July 26, 2010

Rental declines pressurizing landlords in Sharjah

The landlords in Sharjah are having a tough time, with major decline in Dubai rentals. This, coupled with the latest round of power failures, may force tenants to flee to the neighbouring emirates, fear landlords.

Now retaining their current tenants is a major challenge for landlords, as tenants are preferring locations such as Discovery Gardens, Al Ghusais and Mirdif in Dubai.

Few landlords in Sharjah have already reduced their rents to remain competitive with their Dubai counterparts. They could offer more incentives in the wake of power crisis during renewal of tenancy contracts.

Several new residential high-rises in Sharjah are also nearing completion. Another major factor affecting rentals is the amount of supply entering the market, points out the new report by Asteco, when speaking about the situation in northern emirates during second quarter.

Until the recent power crisis issue in Sharjah, the rate of decline for apartments in Sharjah was eased, it was thought. The three-bedroom apartments in Al Khan and Al Nahda, too, recorded a drop of 4% during the second quarter, following 9% decline during the first quarter.

Although there was no rental change for studio apartments, the single and double bedroom units witnessed 8% and 4% drop respectively. This decline is more in the case of villas.

Now, it needs to be watched, how Sharjah's residents, landlords could fallout from the power breakdown during their upcoming contract renewals.

In fact, soft market conditions continue to prevail in the northern emirates in the UAE. Rents in Ajman dropped at the same pace as during the previous quarter, while properties near the Corniche fell 12 percent, following 7% decline during first quarter. But the Corniche area still continues to draw in people working in the emirate.

In Fujairah, Ras Al Khaimah and Umm Al Quwain, there are not much changes reported in apartment rental rates.

The office rental segment in Sharjah is more or less parallel to that of residential. The rents saw a steady decline in rents during the second quarter. Sharjah government is coming out with a tourism masterplan and as a part of this plan, about ten new hotels are hoped to be built in the emirate.

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