Sharjah plugs the gaps in real estate

With almost a quarter of its budget this year allocated for infrastructure development, the government of Sharjah is laying the groundwork for a real estate blitz that could significantly transform the emirate’s property development scene. Sharjah has approved a budget of Dh22 billion for the fiscal year with 24 per cent dedicated to the development of infrastructure, a move that supports ongoing programmes by the Sharjah Investment and Development Authority (Shurooq), which has itself already launched a number of real estate projects.

In January three projects with a cumulative value of Dh2.7 billion were unveiled by His Highness Dr Shaikh Sultan Bin Mohammad Al Qasimi, Supreme Council Member and Ruler of Sharjah. According to Marwan Bin Jassim Al Sarkal, CEO of Shurooq, one of the key objectives now is to be able to fill the gaps and make Sharjah a more competitive real estate market.

We have tried to create the components that are missing from each area where the projects will be in development.

Marwan Bin Jassim Al Sarkal

“If you look at the location of each of the projects, we have tried to create the components that are missing from each area where the projects will be in development,” says Al Sarkal.

The congestion in older communities has also prompted efforts to build new residential destinations, particularly in line with population growth.

According to a JLL Mena report, congestion in the western parts of Sharjah, where many of the older residential areas are located, has contributed to the rise of new residential properties in Al Juraina, Al Gharayen and Al Nouf.

Apartment rentals

Apartment rents in Sharjah declined between 6 per cent and 10 per cent in the third quarter last year, although the average price of apartments sold in Sharjah remained constant, according to JLL’s The UAE real estate market: 2017 — a year in review. The rent for one- and three-bedroom units dropped by 6 per cent, while two-bedroom units fell by 10 per cent. By the fourth quarter, average apartment rents declined further by 13.6 per cent according to Cluttons’ Property Market Outlook report.

Abu Shagara was the weakest area for landlords with rents retreating 15.1 per cent, followed Al Qassimiya with a 10.6 per cent decline.

However, villa rents took a different turn, rising 1.7 per cent during the fourth quarter last year.

“Over the last two years, Sharjah’s villa market has grown in both profile and popularity as the emirate’s real estate market repositions itself with new and affordable options that are helping to retain its appeal and attractiveness among those households that have been priced out of Dubai, or are seeking a more family-oriented lifestyle,” Cluttons states in its report, noting that new mixed-use developments that feature shopping malls and other amenities are among the big winners in the current market. “Communities such as Al Zahia have, as a result, been a runaway success and with most major new shopping mall developments in Sharjah anchoring these new lifestyle destinations, the future of community living in Sharjah appears relatively buoyant, especially when compared to many other property segments in the UAE.”

While Sharjah continues to introduce new real estate projects and concepts, Dubai is also seeing strong growth in new deliveries, which analysts say has had a negative impact on rent recovery. According to Asteco’s Northern Emirates Real Estate Report — Q4 2017, Sharjah widely remains an affordable residential destination for families, but the availability of new and affordable options in Dubai has encouraged several commuting residents to move back from Sharjah to Dubai where they work.

Shurooq’s game plan, though, is to become less dependent on the market conditions in Dubai by launching projects that cater to the diverse lifestyle requirements of residents, while elevating the emirate’s economic performance. “We have been attracting investors by showing them that there’s a market in Sharjah,” Al Sarkal tells PW. “It’s not only limited to free zone areas, but also the opening of hotels, hospitals, retail spaces and more.”

The value-added tax (VAT) is another factor affecting residents and landlords this year. Although VAT does not cover residential rents and sales of new residential property, household budgets are affected overall as prices of goods increase.

However, landlords have so far been reluctant to adjust advertised rents downwards due to concerns about alienating existing tenants, according to Cluttons.

Leasehold

Property ownership laws changed in 2014 and allowed non-Arab expatriates to purchase property in select residential leasehold developments. This has encouraged a rise in master-planned residential developments and thus opening the door to more investors.

The Sharjah Real Estate Registration Department (SRERD) has reported that the value of real estate transactions grew by 37 per cent in the third quarter last year compared with the same period in 2016, which was attributed to an increase in mixed-use, master-planned communities. In the first half last year, the number of residential sales transactions grew by 23 per cent, while real estate sales transactions rose by 46 per cent.

Among the developments where non-Arab expatriates are allowed to purchase property on a 100-year leasehold basis are Tilal City, Al Zahia and Nasma Residences.