Emirates City Forum

Residential rents in Ajman fell 30 to 40 per cent in the past six months as most of the freehold properties are on standstill, or under construction, according to real estate analysts.

Agents told Emirates Business that rentals for a studio dropped by 50 per cent in the past six months, with rents now at Dh18,000 to Dh20,000 per annum from Dh26,000 to Dh27,000. Rentals for one-bedroom apartment dropped around 37 per cent with current rentals in the range of Dh22,000 to Dh30,000 per annum from an average of between Dh35,000 and Dh45,000 per annum. For two-bedroom apartments, rentals dropped around 33 per cent, which are currently in the range of Dh30,000 to Dh35,000 per annum from Dh45,000 to Dh55,000 per annum.

According to Asteco's first quarter 2009 report on the Northern Emirates, average rentals on studios fell by 19 per cent to Dh27,000 per annum, while three-bedroom rents dropped by 13 per cent to Dh57,500 per annum during the first quarter of this year. Real estate analysts said the large decrease in rentals have been due to the fact that a number of freehold properties are under construction.

Mohammed Al Zarah, Vice-President of Great Properties, said sale prices in Ajman's real estate market have dropped by about 50 per cent since August last year. "Prices were at their peak in July. The current prices are likely to drop another 15 per cent between now and October. In Ajman, most projects for sale are on Emirates Road and these are off-plan units – where the price decline was the sharpest. The marina area or sea-view areas saw the least drop. I believe not less than 30 per cent of projects will be cancelled on Emirates Road and am sure more than 60 per cent will be put on hold," said Zarah.

"Last year, if the property was off-plan, on an average the price range was between Dh400 per square foot and Dh450 per sq ft within the city and without sea view, and about Dh750 per sq ft to Dh1,000 per sq ft with sea view. Currently, there are properties for sale at Dh300 per sq ft on Emirates Road, but not many are buying as they are not sure which towers will be complete. Some are only interested in towers that are nearly complete. So, in general, confidence is low."

Rajesh Kumar Krishna, Managing Director, Indiana Real Estate, said the Ajman real estate market has been on a standstill in the past few months with no property transactions concluded in the emirate. "When the real estate market in Dubai improves, things will improve in Ajman, as well. About six months ago, the sale prices in Ajman were around Dh500 to Dh600 per sq ft for a mid-end project. However, that price has considerably fallen. There may be some distress sales happening but even they are not concluding into transactions," he said.

Robert Macnair, Sales Director of Elysian Real Estate, said there is a complete lack of confidence in Ajman market and prices are getting back to original selling prices on developments that have not yet started construction. "We have been approached by a number of developers since the start of the year to assist in marketing the launch of their buildings. But we have declined due to lack of interest from investors and on some because their prices are more than the current price," said Macnair.

Blair Hagkull, Managing Director, Mena, for Jones Lang LaSalle, said Ajman has been similar to other markets in the sense they need two issues to be addressed immediately, one is sentiment and the other liquidity. "There is limited transaction and hence there is limited visibility in Ajman real estate. Also, in the absence of sufficient data information, Ajman realty is being affected negatively. Regulators are an important source of information data and for analysts like us to give an opinion on the market, it is important that we deal with numbers such as how many projects are underway, how many projects are registered and how many developers are registered, etc. The Ajman Real Estate Regulatory Agency (Arra) is taking steps to create more transparency. However, the emirate lacks sufficient data information. There has to be more regulations but smart ones to attract buyers."

Krishna said it is very difficult to put a price indicator or a rental indicator in the market because there have been no transactions for a while and there is not much data available in the market. "The estimates will not be an updated one. However, with regulations being put in place, it will help increase the level of activity in the Ajman realty market.

Macnair said: "There is a shortage of potential residents in Ajman and the emirate has more of sand around. The only movement in Ajman real estate market that we see is owners trying to sell and trying to get some concrete information from developers as to what is happening in the market. I have tried, on behalf of many clients, to get some information from developers, but more often than not no one comments."

Hagkull said the Northern Emirates has an issue with infrastructure as well. "Peopple find Ajman realty market being transformed from an investor-led market to an end-user market. If you need to attract end-users into this market, you need sufficient data to help them come into the market. And for more end-users to remain in the market, there needs to be more complete buildings for occupation.

"The Ajman market has matured a lot. But if one can get a ready unit to live in Dubai, especially when prices in emirate have fallen, other markets would become more interesting. There is always a greater confidence when a project is complete."