A recent report by Cluttons, a leading real estate consulting firm, indicated that residential rents in the Emirate of Sharjah rose during the third quarter of 2014 by 5.3%, compared to a 5.7% increase in the second quarter.
In the villa market, the pace of rent growth slowed to less than 7% during the third quarter, compared to an acceleration of 8.2% in the second quarter.
According to the latest research conducted by Cluttons titled “Sharjah Residential Real Estate Market Outlook for Winter 2014,“ rents in Sharjah continue to face upward pressure, particularly given the ongoing limited supply of residential units; however, the villa segment of the real estate market may be approaching the point of affordability.
Faisal Dorani, Director of Global Research and Business Development at Cluttons, said: ”The slowdown in the pace of villa rent increases does not reflect weak demand, but rather indicates the emergence of an affordability threshold, as middle-income households are unable to keep pace with the rapid growth in rents. Overall, what the Sharjah rental market is experiencing mirrors what previously occurred in the rental markets of both Abu Dhabi and Dubai, and we expect this trend to continue, It is also expected that the approaching affordability threshold will begin to curb the strong growth in rents recorded over the past 18 months, and that is a key issue.”
The report reveals that apartment rents continued to outpace villa rents, rising by 35% over the 12 months ending in the third quarter. Strong demand from tenants remained steady throughout the year against a backdrop of relatively stable supply levels for residential units. Due to a lack of alternative options in the market, families were forced to remain in their homes and often chose to renew their leases to take advantage of the protection provided by the three-year rent cap set by the Sharjah Municipality.