Price conscious residents in the UAE would rather live in Sharjah than Dubai, according to a new report by property broker Cluttons.
The northern emirate is unlikely to see a fall in occupancy levels in 2012, despite a decline in sales and rental rates forecast for neighbouring Dubai, the firm said.
“Any further price drops over the next year in Dubai will inevitably have a knock on effect in Sharjah due to the strong relationship between the two markets,” said the report.
“That said - it is unlikely occupancy levels will be affected as price conscious consumers still prefer Sharjah over Dubai and the growth of the business sector within the emirate is generating more locally employed residents.”
Individuals looking for low cost accommodation can now rent a one bedroom flat for AED25,000 per year, or a two bedroom apartment for AED35,000, according to the report, with prices remaining unchanged over the last six months.
Cluttons believes the stability in Sharjah rental rates stems from a gradual release of new supply onto the market, which is helping it reach maturity.
The northern emirates were badly affected in the wake of the Dubai property crash, which saw rents tumble by more than 60 percent and investors flee the market as funding ran dry.
In 2010, agents in Sharjah’s said the emirate's real estate market was “virtually non-existent”, with sales transactions reaching an all time low due to the lack of freehold properties available.
For a long time, residential lease rates in Sharjah were also considered among the highest in the Northern Emirates despite a drop off in prices in surrounding areas after late-2008. Financing was also an issue, with some banks refusing to lend to GCC nationals for property in Sharjah.
Reports by property firms Asteco and CBRE in 2011 said rates came down significantly this year after many residents migrated to Dubai, where prices have also fallen but the quality of stock remains high.
Cluttons believes Sharjah will see a boost in demand in areas such as Al Majaz, Qassimiya, Al Khan and Al Nahda, where more modern towers are coming online.
“These towers offer communal facilities and central air conditioning, which tenants now demand,” said Cluttons.
“With tenant movement towards newer properties, areas like Rolla, Abu Tine and Al Nabba’a will struggle to maintain high occupancy levels.”