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Sharjah’s three-year rental lock-in period is having a decisive impact on keeping landlords quiet with their demands.
In fact, “with a growing awareness among tenants of their rights under Sharjah Municipality rules, landlords are not willing to risk a loss of income by getting tied up in litigation on any irregular rent rises,” according to a first-quarter market update from Cluttons, the property services firm.
Another factor that has stabilised rental growth is the relatively higher number of new apartment blocks that became ready for occupation in the last 12 months and earlier. While in no way comparable to the Dubai supply situation, new capacity continues to trickle into Sharjah’s residential space, easing the earlier considerable pressure that was there on tenants, market sources added.
There was a heavy rush among prospective tenants whenever a new development started on the leasing process. The rationale was that to get into a new one — even if at a slightly higher rental rate — than succumb to their existing landlords’ “unreasonable” demands once the three-year lock-in is over on an older property.
Landlords with ready projects or those months away from handover seem to have the better of the exchanges. But the Cluttons report suggests changes even here — “The start of 2015 has seen a very different picture emerge, with waiting lists for some previously highly sought centrally located residential buildings shrinking.
“There has also been a recent trickle of vacant units being returned to the market; something that has not been seen for a number of years. This is being driven by tenants being lured to Dubai once more as rents steady south of the border, as well as those moving further afield to Ajman.” (Ajman has seen quite a few residential buildings getting complete and offering units at quite a discount to those prevailing in Sharjah.) Such trends are strengthening the hands of those residents willing to stick with a Sharjah base. They are “using the weaker demand as an opportunity to negotiate for little or no increase in rents at renewal”, the Cluttons report notes. “Most landlords are succumbing to the risk of a void period and leaving rents unchanged at renewal.”
Sharjah landlords are also facing the heat from developments outside of its borders. “The slowdown can in large part be attributed to the dampening rate of increases” in Dubai, where the stabilisation of the rental market is now rippling out towards Sharjah”, the Cluttons report adds.
“This is something we would expect at this stage in the property cycle and is therefore not surprising.”
All of this is a welcome respite after tenants were saddled with an average 24 per cent increase in their rental bills at the end of last year.
Source: Manoj Nair, Associate Editor, gulfnews.com