The residential leasing market in 2015, with the exception of Fujairah, saw rental rates across the Northern Emirates fall marginally, with Sharjah, Ajman and Ras Al Khaimah contributing to the decline, said a report.
The residential leasing market in Sharjah and Ras Al Khaimah registered a two per cent drop, while Ajman market remained flat, stated leading real estate consultancy Asteco in its latest Northern Emirates market update.
The Asteco data is part of its UAE-wide Real Estate Report, which includes a review of 2015 market activity as well as a 2016 outlook.
"Market activity in Sharjah is historically interlinked with that of Dubai, with the two emirates in such close proximity that the ebb and flow of residents between them usually follows the rental market highs and lows in Dubai," remarked John Stevens, the managing director of Asteco.
"But with both emirates investing heavily in infrastructure development and a growing quality-focused residential offering, we are seeing a slow shift towards a more stable environment as investors and tenants consider the quality of life outside of Dubai," he stated.
In 2015, Sharjah added a number of residential developments to its existing supply including the Diamond Tower in Al Nahda with 2,105 units, two residential buildings in Al Tawuun (798 units) and a 175-unit block in the Al Khan district.
This year could see more stock delivered including 1,520 units in Al Nahda (Rayyan Complex), Al Khan (Pearl Tower) and Al Qasimiyah (CG Mall Residences).
"It's worth noting that the swift take-up of newly handed over supply in Sharjah was in some cases, at higher rates than seen previously. This was due to the improved quality of the properties, convenient car parking availability, better facilities and amenities," remarked Stevens.
According to him, this is being driven largely by a rapidly developing tourism product with a number of initiatives launched in 2015 such as the expansion of the Majaz waterfront and the completion of Noor Island.
In the Majaz and Al Khan areas, a 'quality' three-bedroom apartment commanded Dh95,000 ($25,859) and Dh105,000 ($28,581) respectively per annum, compared to Dh85,000 ($23,137) several months earlier.
Affordable developments in Sharjah attracting investors in 2015 included Al Thuriah's Sahara Tower 4 in Al Nahda, where two-bedroom units started from Dh765,000 ($208,236) with 50 per cent of payment due post-completion, and two-bedroom apartments at the Al Rayyan complex were available for under Dh1 million ($272,204), he stated.
According to Stevens, although affordability is a key USP for many entry-level investors, the sales environment in Sharjah is expected to stagnate in 2016.
This is despite the opening up of the market to foreigners, and is led by concerns about the general lack of regulatory clarity a major issue for prospective investors, further compounded by the increase of affordable and competitive products recently launched in neighbouring Dubai, he stated.
"If we consider the bigger picture and look at the Northern Emirates as a whole, only quality projects at truly affordable prices may be able to generate any traction ? and only then if proper and transparent property ownership laws and regulations are in place," added Stevens.
According to Asteco, major projects set to be handed over this year in Ras Al Khaimah include the 1,440-unit Pacific Beachfront development on Marjan Island from the Select Group, with 80 per cent of the apartments already sold according to the developer.
The popular Mina Al Arab community will launch phase two of its Flamingo Villas this year, delivering an additional 68 units by the year-end, ranging in size from 2,008 to 2,334 square feet.
Currently, new RAK developments are commanding average annual rental rates of Dh60,000 ($16,332) for a two-bedroom apartment, down from Dh63,000 ($17148) in 2014, with three-bed units achieving Dh100,000 ($27,220) down from Dh110,000 ($29,942) in 2014.
Ajman is also working to upgrade its attractiveness with exciting initiatives such as the Al Zorah development adding a golf course to the lifestyle offering. This year will also see the launch of a five-star Oberoi hotel in mid-2016.
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