According to the report, the weaker conditions in the market are expected to persist as the year wears on, with rental falls of between 3% and 5% likely, on average.
Faisal Durrani, Head of Research at Cluttons said, “Rents across Sharjah’s more affordable areas remain linked to the performance of Dubai’s rental market. With a weak short term outlook for Dubai, we do not expect to see any turn around in rental value growth until jobs linked to the World Expo in 2020 start to materialise, which we should start to see in the next 12 to 18 months. Until then, the rental market in Sharjah is expected to remain subdued.”
Office Market
In the office market, rents across Sharjah’s main submarkets have stayed flat over the past six months, with all three of the city’s main areas (Al Soor, Al Majaz fringe areas, and Al Majaz prime areas) experiencing no change. The only market to have showcased any change in the past 12 months is the fringe areas of Al Majaz, where office rents increased by 7.7% between Q1 2015 and Q1 2016 and currently stand at 70 psf; up from AED 65 psf in 2015.
“While the silver lining for Sharjah’s office market is the relative stability in the level of prime office supply, the level of requirements has continued to dwindle. The vast majority of requirements that we have been recording are from the emirate’s important SME sector; which is usually for space in the region of 1,000 sqft.” said Durrani.
Aside from this core demand driver, Cluttons has noted a handful of requirements from oil and gas linked occupiers, who, alongside the public sector and quasi government sector, continue to drive larger space requirements.
“Despite the relative stability in the emirate’s office market, we are expecting to see rents decline this year between AED 5 psf and AED 10 psf across the board. With entry level rents in comparable, desirable and sought after office submarkets in Dubai such as Deira, Bur Dubai, Garhoud, Jumeirah Lake Towers and Business Bay currently standing at between AED 60 psf and AED 75 psf, it is likely that Sharjah’s office landlords will be left with little option but to drop rents to below those in Dubai in order to entice demand,” Durrani concluded.
