Prices for renting and buying property in Sharjah are continuing to decline as the emirate strengthens its reputation for affordable housing, according to the latest first-half report from UAE property portal Bayut.com.
Buyers and renters in the emirate gained as prices fell in most areas compared with the second half of last year.
“Sharjah prices are at a very attractive point and present a good opportunity for investors to diversity their investment portfolio,” said Haider Ali Khan, chief executive of Bayut.
However, changes to property laws in Sharjah announced in April, which allow non-residents to own property in the emirate – may see increased interest in property sales as the year progresses.
“As the summer months roll in, we expect prices to stay stable in Sharjah through this quarter," said Mr Khan. "With more off-plan projects picking up in Sharjah, with some allowing ownership by folks from outside the GCC, this will help generate more interest and transactions going forward.”
The largest rental price decreases in the first half over the second of 2017 were in Al Nahda, where the average 1-bedroom apartment slid by 16.2 per cent, while the average sales price for a 2-bedroom apartment fell by 14.3 per cent.
Decreases in average apartment sales prices were, apart from in Al Nahda, on average between 1 per cent and 10 per cent.
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For apartment rentals, in addition to declines in Al Nahda, prices also fell by 8.9 per cent for 2-beds in Al Khan.
Al Majaz was the most popular for apartment sales in H1 2018, with the average price for a 2-bed property reaching Dh741,000. Al Qasimia, which was the most popular area for apartments rentals, still saw the average rental price for a 2-bed property fall by 11 per cent to Dh33,000.
Separately, The National reported on Sunday that In Ajman the cost of buying and renting fell by up to 20 per cent in some neighbourhoods in the first half as a result of rising supply, according to data from UAE online marketplace Dubizzle.
“Across the UAE, properties are becoming more affordable resulting in a decline in the cost of living,” said Samer Abdin, general manager at Dubizzle’s property division, on Sunday.
“We are seeing an oversupply of property units in the market right now, which has created a more competitive and affordable market. Apartment sale prices in Ajman in particular have fallen at a more pronounced rate than rental prices, giving property seekers an excellent opportunity to invest in their own property."
Al Jurf and Ajman industrial area saw the largest annual decline in rents in the first six months of 2018, at 18 per cent. Al Sawan followed with a 14 per cent decrease and Emirates City dropped by 10 per cent over the period.
Apartments in Al Nuaimiya saw the biggest drop in average sales prices, at 23 per cent, according to the report, followed by Emirates City (21 per cent) and Al Mushairef (19 per cent).
“While these areas experience heavy declines, Al Sawan experienced the lowest drop in average sale price, of 10 per cent,” Dubizzle said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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