Property market subdued in UAE's Northern Emirates

Apartment and villa rental rates were mostly unchanged as ongoing problems with electricity connections, water and sewage continued to slow the pace of supply, the report noted.

Prices are expected to remain sluggish in early 2012 but are likely to fall in the latter half of the year as more supply enters the market.

In order to spur demand over the past three months, landlords in Sharjah and Ajman offered rent-free periods of one to two months with no commission for new projects there, Asteco said.

"The demand trend for apartments in the Northern Emirates has primarily been for families looking for larger two and three-bedroom units," said Elaine Jones, CEO, Asteco. "Families tended to relocate within the same emirate due to children's schooling and value-for-money units."

In the first half of 2011, Asteco reported a continuing shift of residents from these emirates to Dubai, as tenants looked to upgrade and take advantage of falling rent prices in Dubai.

The average yearly rental rate for a three-bedroom apartment in Sharjah ranged from Dhs35,000 to Dhs63,000 in the fourth quarter, compared to between Dhs35,000 and Dhs40,000 in Umm Al Quwain.

Rental rates for three-bedroom villas in Sharjah went for an average of Dhs70,000 in both Al Khan and Shargan, and Dhs77,500 in Al Quz.

Sales activity for both residential properties and offices in the Northern Emirates was limited throughout the year and some completed buildings in Sharjah, Fujairah, Ajman and Ras Al Khaimah remained empty due to a lack of utility connections and inadequate sewage.

Several buildings in Fujairah and Ras Al Khaimah are expected to get electricity connection this year resulting in an increase in the number of available units and therefore a drop in rental rates.

However, connectivity problems throughout the Northern Emirates as a whole will continue and are expected to be resolved at a slower pace due to the high number of buildings marked for completion and handover.

Bureaucracy continued to prompt more existing businesses in Sharjah to move to neighbouring Dubai and Ajman Free Zone in the fourth quarter with other emirates expected to compete heavily for Sharjah business early this year, the report noted.