Rental Index Shows Cooling Renewal Rates

Sharjah's Rental Index, introduced in January 2025, is beginning to influence rental rates, particularly for renewals. After a period of sharp increases, especially in upgraded older buildings, the market is expected to stabilize from September onwards. Industry sources suggest that the impact of the index will be most noticeable in slowing down rent hikes during lease renewals.

Significant rent increases, ranging from 18% to 25%, were observed in many Sharjah apartments earlier in 2025, even in older buildings that had undergone renovations. The introduction of the Rental Index is anticipated to moderate these increases, especially for renewals, as landlords and tenants align with the new benchmarks. Areas like Muwaileh Commercial, Al Majaz, Al Khan, and Maryam Island, along with newer townhouse developments, have seen high rental gains.

Rental prices vary based on building age and amenities. Older buildings with good features have 2-bedroom units renting around Dh50,000 annually, while newer, custom-built buildings average Dh70,000. Developments with enhanced facilities can command Dh90,000 to Dh110,000 for 2-bedroom units. New buildings often offer competitive rentals but lease quickly due to amenities and flexible terms. Older, poorly maintained buildings are starting to stabilize as tenants have more options.

New and upgraded residential buildings can achieve rental premiums of 12%-22% over older options. The gap widens in high-demand areas like Al Khan, Al Majaz, and Maryam Island, driven by factors such as build quality, parking, and maintenance. Older properties lacking significant maintenance are competing on price and incentives.