With Dubai’s real estate market benefitting tremendously from the improved economic conditions, tenant demand has once again begun to ripple across the border into Sharjah, Dubai’s northern neighbour and the UAE’ third largest emirate. Like previous cycles, we are seeing a trend of migration from Dubai to Sharjah, as tenants seek out more affordable housing options, with submarkets along the Dubai-Sharjah border, such as Al Nahda and Al Majaz, seeing the sharpest upturn in demand.

Like elsewhere in the UAE, Sharjah was impacted by the recession, with construction work on several residential and office schemes being halted during the depths of the crisis. Although many of these schemes are once again seeing resumption in building work, the delivery timelines mean that there will be no immediate relief from the current supply dearth, suggesting that rents will continue to maintain their upward momentum.

This will be particularly noticeable in the city centre, where occupancy levels of close to 100 per cent are being reported across most residential buildings.

Al Nahda has already begun to experience the impact of this, with rents rising by 5.8 per cent in the third quarter alone, leaving them 21.7 per cent up on this time last year. Similarly, Al Majaz has recorded a 4.8 per cent increase on average rents over the same period, taking them 15.8 per cent higher than the third quarter of 2012.

Despite these gains, rents in Al Majaz are significantly more affordable when compared to most locations in Dubai. Average rents for two-bedroom apartments in Al Majaz stand at Dh52,000 per annum. This contrasts with rents in Dubai of between Dh51,000 per annum (at International City, Discovery Gardens and the International Media and Production Zone) and Dh162,000 per annum (in Downtown Dubai, the Palm Jumeirah, DIFC and Dubai Marina), for lower end and high end two-bedroom apartments, respectively.

Adding to the demand being driven by relocations from Dubai are families relocating from some of the more troubled parts of the region. They appear to be honing in on Sharjah and prefer it to neighbouring Dubai, primarily due to the emirate’s strong cultural identity and family friendly amenities.

The recently upgraded facilities at Al Majaz waterfront, along Buhairah Corniche have helped to add to the lure of Sharjah. The original 231,000 square metre, 20-year old Al Majaz Park was completely redeveloped by the Sharjah Investment and Development Authority (Shurooq), with the first phase opening during the spring last year. The choreographic dancing fountains, mini golf course, selection of al fresco dining options, which include the likes of Baha Fresh, TGI Friday’s, Tim Hortons and Fat Burger, along with the grand Al Majaz and nearby Al Noor mosques have translated into heightened desire to live in the area.

During the first six months of 2013, Al Majaz Waterfront received 1.2 million visitors, underscoring its appeal. The Al Majaz area in general is unique in the UAE, with the entire area being linked by walking paths and continuous parks and gardens around Buhairah Corniche, which lends itself well to families with children.

Value for money has long been an attraction for tenants moving to Sharjah, particularly as rents in nearby Dubai, or the UAE capital, Abu Dhabi, have always been significantly higher. Sharjah’s rents have often been influenced by the ebb and flow of real estate cycles across the border in Dubai.

However this trend may be starting to abate as the government of Sharjah makes a concerted effort to diversify its economy away from hydrocarbons. A nurturing of the hospitality and leisure sector through the launch of Air Arabia, the enhancement of Sharjah International Airport, the creation of several museums, the development of the Qasba Canal quarter and the expansion of the number of hotels and resorts in the emirate has had a knock-on effect on the overall residential draw of Sharjah.

We expect to see this trend gain further traction in the short to medium term. With a completion date of 2025, The Heart of Sharjah Project, which draws its inspiration of Paris’ Sacré Couer, is expected to add another dimension of cultural appeal. To be developed by Shurooq, the project is one of the largest of its kind in the region and aims to restore the city’s old central district, with museums, galleries, restaurants, markets and a boutique hotel planned.

These projects capitalise on the heritage and culture of the UAE, with a distinctly Islamic feel. This is allowing Sharjah to tap into a niche, culture-driven, tourist market, largely unexploited by other states in the UAE.

And in doing so, a vibrant, modern Islamic city, with strong links to its past, is beginning to emerge, which is impacting on Sharjah’s desirability as a place to live and work.

The writer is the head of Cluttons Middle East.