Demand drives rental prices in sharjah back to peak levels

The real estate specialist’s latest report shows that landlords in the Emirate are once again benefiting from the rising residential rents in Dubai and an influx of people who are being priced out of the market accordingly.

Shane Breen, associate director, at Cluttons in Sharjah comments: "Sharjah is viewed as the most suitable alternative to those finding themselves out-priced by rising rents in Dubai.”

But demand is now outstripping supply for the first time since the global financial crisis, adds Breen, while landlords are offering increasingly tight payment terms.

The recent launch of Arenco Golden Sands Tower in the Al Nahda area of Sharjah, illustrates the strength of the rental market with prices from AED 41,000 for one bedroom units - prices that have “not been seen in Sharjah for several years”.

In addition, 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.

While this tower doesn’t set the market rate, explains Cluttons, it represents a significant shift in the market. The Arenco Golden Sands Tower is in a convenient location and offers a high standard of finishing and facilities, which is catering to current market demands. Other rental rates in the same location average at around AED 30,000 to 32,000 per year for a medium quality one bedroom flat.

“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," explains Shane Breen.

Government legislation is in place, though, 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 predicts 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,” concludes the report.